World Bank praises Egypt, could offer more funds

The head of the World Bank praised the Egyptian cabinet's economic reforms and said on Sunday the bank was ready to provide new financing, adding that his only advice was that Egypt follow through on its promises.
James Wolfensohn told reporters after meeting Egyptian Prime Minister Ahmed Nazif that the Washington-based body was ready to offer funds in infrastructure, banking reform and education.
"We are extraordinarily impressed by the early steps of this government for reform, the concern in the social sector as well as the economic sector," Wolfensohn said in Cairo.
Nazif's cabinet, appointed in mid-July, has announced a raft of reforms that include slashing customs tariffs, which economists said would encourage more competitive industry, and proposing tax cuts, a move partly aimed to encourage Egyptian consumers.
The moves have been widely praised by business, while investors have shown their approval by sending the stock market up by some 25 percent.
"You are headed now for increased growth. It will come not overnight, but it will come absolutely certainly if you follow through with the reform programme that has been outlined," Wolfensohn said.
Egypt's growth has picked up, rising above 4 percent in the last financial year to June 2004, but economists said Egypt needs 6 percent or more to significantly improve living standards and help reduce the number of jobless Egyptians.
"Yours is a country that has been held back by some administrative issues, by legislative issues, by bureaucratic issues. Here you have a government that is coming in with an absolute commitment to change," the World Bank chief said.
Businesses have long complained that one of their biggest hurdles to working in Egypt has been red tape.
The government's tariff and tax reforms include streamlining collection and reducing the number of customs and tax brackets.
The reforms also include the sale of state-held stakes in some public-private joint venture banks and of at least one fully state-owned bank, a move that economists have said would prove the government's commitment to privatisation.
"We did not discuss specifically any new loans. I simply told the prime minister that we are ready to be supportive on infrastructure and any financing required in reform of the banking sector, in education." Wolfensohn said.