‘Work is continuing quite well on these fast-track projects, and we expect our board to approve roughly $300 million for the airport projects in early 2004,’ World Bank director for Egypt Mahmoud Ayub told MEED on 30 September. ‘But we are still in discussions about the policy-based support. We are unlikely to make any recommendations for the first $500 million tranche until next year, and the second loan is unlikely to make any progress for at least a year after that. When the government takes the appropriate economic measures, then we’ll take it to the board.’
Egypt has applied for a $300 million concessionary loan for the $350 million-450 million airport expansion plan. The deadline for negotiations is 10 November and final approval is due from the bank on 16 March. Early estimations are that the composition of project expenses will be 70 per cent foreign currency and 30 per cent local currency, with the remaining funding to be provided by the state-owned National Investment Bank(see Construction).
Negotiations have also progressed smoothly over a $150 million loan request for an irrigation improvement programme, which involves co-ordinating water distribution programmes for agriculture across the country. ‘This is a specific project which has our support, and we expect to make our recommendation to the board in September or October 2004,’ says Ayub.
Less progress has been made on the remaining $1,000 million of support for a broader economic reform programme, which was agreed in principle in March. This comprises two $500 million tranches, which will be supplied jointly by the World Bank and African Development Bank. Priorities include reform of the customs regime and liberalisation of the financial sector, but analysts say there has been little progress on co-ordinating small-scale programmes to date.
‘The problem at the moment is we have no outside referee, and we really need an organisation like the IMF to come back in again,’ says a senior government adviser. ‘This is not going to be popular, but we can find agreement on some points and produce our own programme which can be passed to the People’s Assembly and then be provided for outside inspection. The problem is we let the reforms stop because we didn’t like the bad taste of the medicine.’
(See Egypt Special Report, pages 25-42)