Egypt - AfDB Supports Financial Reform Programme. Board Approves US$ 500 Million Budget Support Loan
Tunis, 26 July 2006 – The African Development Bank (AfDB) will support comprehensive structural and financial reforms initiated by the government of Egypt with a loan of US$ 500 million (4.2 billion Egyptian Pounds) approved by the Board of Directors of the Bank on Wednesday in Tunis.
The overriding objective of the Financial Sector Reform Programme (FSRP) is to develop a market-based, efficient, competitive and sound financial system that will better serve Egypt’s development and growth objectives. It seeks to enhance the efficiency of financial intermediation and risk management in the economy, to build safe and sound banking and non-bank financial sectors through comprehensive structural and financial reforms that will accelerate economic growth and development.
The Programme constitutes part of the whole reform agenda covering the period 2004 – 2008, under four major pillars:
- Introduction of a comprehensive and transparent Monetary Policy Framework;
- Improving the functioning of the Foreign Exchange Market
- Implementing a Banking Sector Reform;
- Strengthening the Non-Bank Financial Sector.
The loan will support activities aimed at increasing private sector participation in the financial sector, implementing financial, institutional and operational restructuring of state-owned banks and strengthening the regulatory and supervisory capabilities of financial sector regulatory agencies. It will also help restructure the insurance industry and reduce the State’s dominance of the sector through privatization and expansion of the capital market.
The estimated cost of the programme is 50 billion Egyptian Pounds (about US$ 8.7 billion). The government plans to finance the Programme through a combination of privatization proceeds, budget support grants and loans, debt instruments, and direct fiscal resources.
The ADB Group began operations in Egypt in 1974. To date, its commitments in the country stand at US$ 2.2 billion (12.65 billion EGP) in 48 operations.
- Name of Project: Financial Sector Reform Programme (FSRP)
- Borrower: Government of Egypt
- Executing Agency: Ministry of Investment and the Central Bank of Egypt.
- Start up date: September 2006,
- Duration: 2006-2008
- Procurement: The Bank’s support to the programme is in the form of a development budget support loan. The Bank’s funds would not be linked to any specific procurement, and, as a result, no specific acquisition procedures are required.
- Funding of Program ADB, World Bank, USAID, Goverment of Egypt