EconSource: World Bank approves $3 billion loan for Egypt

The World Bank has approved a $3 billion loan for Egypt, which will be disbursed over the next three years, International Cooperation Minister Sahar Nasr said Thursday. Nasr said the loan has a maturity of 35 years and carries an annual interest rate of 1.68 percent. She said the loan will help the government secure economic growth.=The decision comes as the World Bank Group’s Board of Executive Directors endorsed a new Country Partnership Framework (CPF) to support Egypt. “We are pleased to support [Egypt’s] reform program of promoting fiscal consolidation, ensuring sustainable energy supply, and creating a supportive business environment for entrepreneurs,” World Bank Country Director for Egypt, Yemen, and Djibouti Asad Alam said. “This program is a central element of our CPF to promote policy and institutional reforms for inclusive growth.” The CPF for Egypt covers a five-year period from 2015 to 2019. Total World Bank Group financing, which includes financing from the International Bank for Reconstruction and Development and the International Finance Corporation, will reach $8 billion during this period. Also on Thursday, Nasr signed a $500 million loan with the African Development Bank, the first tranche of a $1.5 billion loan that will be provided over three years for economic development and budget support. [Reuters, DNE, 12/17/2015]

World Bank lends Iraq $1.2 billion to face oil, security shocks
The World Bank said Thursday it would lend Iraq $1.2 billion in emergency support as the country struggles with the economic effects of low oil prices and fighting the Islamic State (ISIS or ISIL). The budget support loan will be disbursed in a single tranche and should be available to Iraq before the end of the year, said World Bank Director for the Middle East Ferid Belhaj. “These twin shocks [low oil prices and fighting ISIS], coming at this particular juncture, are threatening the stability of the country,” Belhaj said. He said Iraq has committed to undertake economic reforms to address structural distortions. These include efforts to make state-owned enterprises more efficient, improve management in the energy sector, and reduce the dominance of state-owned commercial banks to leave space for private lenders. “For the first time, we have started leveling the playing field in the financial sector,” Belhaj said. “This is really a major, major departure after years and years of monopoly.” He also said it was essential for Iraq to keep up the pace of these reforms and maintain fiscal discipline even if the economic situation stabilizes. [Reuters, 12/17/2015]

Minister says minimum wage hike to contribute to Turkey’s GDP growth
Turkey’s planned increase in the minimum wage will boost the country’s gross domestic product (GDP) by about 0.4 points, Economy Minister Mustafa Elitas said. “There are over 5 million registered minimum wage earners in Turkey. With the planned raise in the minimum wage to 1,300 liras, a positive contribution of around 9.5 billion liras will be made to Turkey’s economy, adding 0.4 points GDP,” he said, adding that this could boost Turkey’s GDP growth to 4 percent in 2016. He said that the government would not allow this raise to create a “permanent soaring effect” on inflation. [Hurriyet, 12/28/2015]

Kuwait to launch free economic zone on islands
Kuwait has said it will establish a free economic zone on five islands close to the shorelines of Iraq and Iran with large investments open to the private sector. The decision was taken by the Gulf state’s Supreme Planning Council late Wednesday. Planning Minister Hind al-Sabeeh said the project is based on inviting local, regional, and international private sectors to finance, execute, and operate the zone. She said the zone will act as an economic gateway for the northern Gulf once it is completed. The new venture comes amid a sharp fall in oil income, which contributes over 90 percent of Kuwait’s revenues. The islands are spread over an area of several thousand square kilometer and are in proximity to Kuwait’s planned Silk City project in Subbiya. Work is underway on a $2.6 billion causeway linking the capital with Subbiya. Bubiyan, the largest island where Kuwait is already building a multi-billion dollar container harbor, is part of the project. [AFP, 12/17/2015]

Also of interest
Oman to privatize three state-owned firms next year | Reuters
Egypt, Saudi Arabia forging closer ties with investment boost | Al Arabiya
Egypt to receive a $200 million grant from China | Ahram Online
Egypt’s Finance Ministry presents strategy to manage public debt | DNE
Egypt delays rates decision as central bank urges economic reforms | Bloomberg
Russia said to raid 24 banks on Turkish laundering allegations | Bloomberg
Iran calls for cooperation to boost crude prices | Reuters