CAIRO — The World Bank Group announced on Thursday a $1 billion loan to Egypt, the first installment of an $8 billion financing plan to help the country carry out key economic reforms.
The size of the loan, coupled with its goal to help the government "renew its social contact with its citizens", indicate a "clear departure from past World Bank support for Egypt," the bank said in a statement.
The $8bn loan will be disbursed over a four-year period and future loan installments will be dependent on the country's progress in carrying out economic reforms.
The financing plan provides much-needed foreign currency to Egypt, which heavily relies on imports and has been struggling economically in the wake of the 2011 uprising that toppled longtime autocrat Hosni Mubarak.
The World Bank Group's primary focus is to create much-need jobs for Egypt's unemployed youth, improve services and "promote more effective protection for the poor," said Asad Alam, World Bank Country Director for Egypt, Yemen and Djibouti.
According to Egyptian government figures, over a quarter of Egypt's young people are unemployed and over half lives in poverty.
"Jump starting the economy can't happen without enabling the private sector to play a catalytic role in diversifying the economy, increasing competitiveness, and creating jobs," said Mouayed Makhlouf, the Middle East and North Africa director of the International Finance Cooperation, which is financing about $2bn of the total loan.
Egypt's economic outlook declined following the Oct. 31 crash of a Russian passenger jet in the restive Sinai Peninsula, which led Britain to suspend flights to the Sinai coastal resort of Sharm el-Sheikh and Russia to suspend all flights to Egypt over concerns the plane may have been downed by a bomb. Tourism is one of Egypt's largest sources of foreign income.