According to bank provided information, management submits the following report and recommendation on a proposed ADB Loan of USD 170 million to the Arab Republic of Egypt to finance the second phase of the Private Sector Development and Economic Diversification Support Program (PSD-EDSP II). The PSD-EDSP is designed as a programmatic series of two consecutive General Budget Support (GBS) operations covering the fiscal years (FY) 2023/24-2024/25. The proposed loan is the second of the two-year Program Based Operation (PBO) series, following the Board'sapproval of the first phase on 22 November 2023 for an amount of one hundred and thirty-one million USD (USD 131,000,000) and subsequent implementation of the related program measures. This multi-year framework provides a medium-term platform for dialoguewith the Government of Egypt (GoE) on essential reforms.

The Program is a sectorial budget support operation, and the overarching development objectiveof the PSD-EDSP II is to facilitate increased private sector development by improving the business environment and diversifying sources of growth. Egypt's macroeconomic areas under improvement, exacerbated by the recent global shocks, highlight the importance of building a stronger and more resilient economy notably through: (i) increased private sector participation, (ii) the development of the industrial sector and (iii) an accelerated transition toward green energies.

The program's direct beneficiaries are the Egyptian State through the Ministry of Finance (MoF), as the program amount will be added to the State budget; the private sector, notably the private industrial and agri-business sectors, which will also benefit directly from this program through different reforms that will enhance investment conditions. By promoting private sector development, the program will have a direct impact on job creation which in turn is expected to improve the standard of living for citizens. SMEs, especially women-owned SMEs, are also indirect beneficiaries of the PSD-EDSP, as the identified measures should facilitate business access to minor claims procedures through the amended law on small claims. Additionally, the program willcontribute to minimize the effect of climate change by promoting the green transition.

Name Olivier Georges STOULLIG
Email o.stoullig@afdb.org 

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