In a letter addressed to the International Development Committee in the UK House of Commons, the FCDO explained that the guarantee is part of a planned financing package involving three upcoming Development Policy Financing (DPF) operations by the World Bank.
The UK Foreign, Commonwealth & Development Office (FCDO) has given preliminary approval to provide a $200 million loan guarantee to the World Bank on behalf of Egypt, as part of broader efforts to support the Egyptian economy, according to an official document seen by Al Borsa.
In a letter addressed to the International Development Committee in the UK House of Commons, the FCDO explained that the guarantee is part of a planned financing package involving three upcoming Development Policy Financing (DPF) operations by the World Bank.
These operations aim to ease Egypt’s immediate financial pressures and support the structural reforms needed to ensure fiscal stability and sustainable growth.
The document confirmed that the guarantee does not currently require direct funding from the UK’s aid budget and will only incur costs in the event of a default by Egypt—an outcome the ministry described as low risk.
The estimated maximum annual exposure in the case of default is approximately £16 million, representing less than 4% of the UK’s budget allocation for the Middle East and North Africa in the FY2025/2026.
The UK Foreign Office noted that this support comes in response to the economic crises Egypt has faced due to the fallout from the Russia-Ukraine war and escalating tensions in Sudan and Gaza, all of which have challenged Egypt’s macroeconomic stability and underscored the need for additional international backing.
The UK’s loan guarantee—aligned with conditions set by the World Bank and the International Monetary Fund (IMF)—is contingent on Egypt making satisfactory progress on its economic reform program from 2024 to 2027.
Key elements of the program include exchange rate liberalization, reductions in public spending, and structural reforms in fiscal policy and governance.
The document indicated that the UK’s guarantee obligation could last up to 35 years.
Oversight mechanisms within the FCDO, including a Financial Transactions Steering Board, will be in place to ensure adherence to predefined risk ceilings.
