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As the fate of a World Bank loan to support reforms in Egypt remains unclear, civil society is taking proactive measures to ensure that future loans to the country are transparent.
In an April 6, 2011 speech at the Peterson Institute for International Economics, World Bank President Robert Zoellick declared that any loans to post-Arab Spring transitional governments would be contingent on transparency measures. “We will encourage governments to publish information, enact freedom of information acts, open up their budgets and procurement processes, build independent audit functions, and sponsor reforms of justice systems,” he said. “We will not lend directly to finance budgets in countries that do not publish their budgets or, in exceptional cases, at least commit to publish their budgets within twelve months.”
A new US$1 billion loan from the World Bank was under negotiation in the summer of 2011 for Egypt, when suddenly the Egyptian government declared that it was rejecting the loan because of the ‘bad conditionalities,’. It was expected that this loan – and so-called conditionalities – would be similar to a recently-approved loan for Tunisia which had included certain transparency and accountability measures. With the economic crisis looming in Egypt and the decreasing foreign currency reserves, the Egyptian government decided to renegotiate the loan in the winter of 2012. In a press conference on February 7, Mr. Zoellick commented on the loan renegotiation saying that “[the bank] would insist on the same measures and would expect tensions.”
In March 2012, six civil society organizations sent a letter to Mr. Zoellick applauding his stand for transparency even when that stand may have meant the government’s rejection of the loan in the past. Civil society organizations attested their support for the same position regarding the current negotiations.
In April 2012, Mr. Zoellick replied assuring the senders that “the World Bank Group remain[ed] fully committed to the principles [he] outlined in [his] April 6, 2011, Peterson Institute speech.
In another development, the Egyptian parliament recently rejected a different World Bank loan for wastewater management because the interest on the loan does not follow the Islamic financial law. This position taken by the parliament could affect any further new loans from the Bank. In addition, since this specific US$1 billion World Bank loan for governance reform has been in the process of negotiations since the summer of 2011 and is also linked to a separate loan from the IMF which itself has been renegotiated many times, once again, the fate of this World Bank loan remains unclear.