World Bank urges Egypt to be more transparent, loosen state grip on economy

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Egypt needs to get more transparent about its debt, and that includes amounts owed by state-owned enterprises in an economy where the government plays too large a role, a senior World Bank official said.

The North African nation revived a plan to sell stakes in state-controlled firms earlier this month as part of an economic revamp that aims to secure aid from the International Monetary Fund and regional allies. Egypt’s recent $3 billion deal with the IMF also included a commitment to shrink the footprint of state-run enterprises.

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“Egypt needs debt transparency that touches on the debt of state-owned enterprises,” Ferid Belhaj, the World Bank’s president for Middle East and North Africa, said in an interview with Bloomberg TV.

“They are moving ahead with it, but there is still effort to be made,” he said.

Egypt, one of the region’s most indebted countries, is trying to overhaul an economy tipped into crisis by Russia’s invasion of Ukraine, which sent food and energy prices soaring and hit tour-ism revenues.

Last week Moody’s Investors Service downgraded the country’s credit rating deeper into junk territory, citing its declining ability to absorb shocks.

Private companies in Egypt, whose role is central to job creation, have struggled to thrive in an economy dominated by state entities, in particular those belonging to the military.

This state dominance is an issue in Egypt and throughout the region, according to Belhaj.

“The state should not be the entrepreneur,” the state is the regulator and frames the broader parameters of the economic activities, he said.

Debt is also an issue in Lebanon, Tunisia, and Jordan, Belhaj said, calling for efforts to improve transparency and the management of the economy. He also voiced concerns about regional jobless rates, especially among younger people.

“The youth in MENA are sitting there, many of them idle,” he said. By 2050, some 300 million young people will be “knocking on the door of the job market.”

“It is a huge liability but it’s an immense opportunity, he said.

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