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Sunday, 18 March 2018

Egypt must expand the social safety net to support the middle class -World Bank Group

Egypt’s next wave of reform needs to pay special attention to supporting the middle class, according to Merza Hasan, dean of the executive board and executive director of the World Bank Group (WBG). “There must be a social protection program for the middle class because it’s that group that will be the main driving force for the economy,” he said, noting that while absolutely necessary, reforms have not been cost-free, especially for the mid- and lower-income classes. Speaking to the press delegation that accompanies AmCham on its 40th Doorknock mission to Washington, DC, Hasan pointed out that the government is aware of the social implications of its reform program and need to help the middle class overcome these challenges and push through to a new chapter of economic prosperity.

Improving health and education is another must. “The Bank and Egyptian government are very focused on tackling the issues facing the sectors of health and education because these ensure the sustainability of the economic reform measures that have been adopted,” said the WBG’s Alternate Executive Director Ragui El-Etreby, adding that actively pursuing good governance practices is also important for development. Human capital is Egypt’s greatest asset, Hasan also said, and educational reform should deviate traditional norms to focus on skill development and capacity building to enhance people’s employment prospects. “I believe that if we begin taking serious steps in reforming health and education then we will have provided the middle class with the protection it needs,” Hasan said. “But these things take time.”

Talks are already ongoing between the WBG and Egypt to decide on the best ways to expand the scope of their partnership to include health and education, according to El-Etreby, who said he expects to see “tangible developments” on that front soon.

It’s still unclear how much financial support Egypt can expect from the World Bank in 2018, but we could be looking at a package of over USD 1 bn to match last year’s if the Group is able to bolster its own capital. This past fiscal year already saw the WBG expand its budget for the region to USD 6 bn from USD 2.7 bn previously, and Egypt specifically has received significant focus as a reflection of confidence in ongoing development. “We know that reform efforts are serious this time around because they have come to include a social aspect to ensure their sustainability…and we already seeing results,” he said, pointing specifically to the WBG’s partnership with Egypt on renewable energy and the USD 500 mn development package for Upper Egypt. Hasan pointed out that the Bank is not only interested in providing Egypt with financial support, but also technical support and capacity building.

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