World Bank to lend US$6 billion to Egypt and Tunisia
Source: BI-ME with Reuters , Author: Posted by BI-ME staff
Posted: Tue May 24, 2011 9:16 pm

INTERNATIONAL. World Bank President Robert Zoellick on Tuesday unveiled US$6 billion in fresh funding for Tunisia and Egypt ahead of a meeting of Group of Eight industrial powers in France starting on Thursday.

Zoellick said a Group of Eight meeting in Deauville, France, this week will discuss transitions sweeping the Middle East and North Africa, and ensure that financing for Egypt and Tunisia leads to reforms that ensure all-inclusive growth and create jobs.

Zoellick said the G8 could help by promoting investment and trade with countries in the region.

He said the World Bank was working closely with the IMF, which is overseeing a separate funding package focused on macroeconomic stability and reserve shortfalls.

An IMF mission is currently in Egypt.

The World Bank on Tuesday cut its 2011 forecasts for growth in the Middle East and North Africa to 3.6% -- below the 5% it previously projected for the year.

The World Bank package includes support for the countries' budgets and lending that will shore up the private sector and encourage new investment through political insurance coverage.

"My primary interest is to try to help these countries undertake the reforms that get them back to market," Zoellick told a conference call.

For Egypt, the World Bank said plans to lend US$4.5 billion over the next 24 months, including US$1 billion this year in budget support and another US$1 billion next year, depending on how far political and economic reforms have advanced.

The remaining US$2.5 billion will be invested in development projects in Egypt, lending to support the private sector, and political risk guarantees.

For Tunisia, the World Bank plans US$1 billion in support for the budget and investment projects, beyond the $500 million already announced to held the government, Zoellick added.

In addition, the World Bank plans to lend up to $400 million for private-sector investments and another US$100 million in political insurance coverage. He said the funding will be disbursed following World Bank board approval next month.

He noted that Tunisia's interim government was also dealing with the cost of an estimated 50,000 refugees fleeing the conflict in neighboring Libya, with only 6,000 to 7,000 in U.N. camps.

A World Bank report on Tuesday said the region needs about 50 million to 75 million jobs over the next decade to absorb new labor market entrants and reduce unemployment.

"If growth and the employment response to growth remain close to the experience of the past decade, the region will add about 4.8 million jobs this year, or 48 million between 2011 and 2020," the report said.

The report emphasized that the region needs to restore investor confidence and attract both domestic and foreign investment, starting with legal and regulatory reforms, and credible policies that ensure a break with past practices.

 

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