Egypt’s Planning Minister Advocates for Innovative Financing at Islamic Development Bank Meeting

H.E.Dr. Hala El Said, Minister of Planning and Economic Development and Governor for Egypt at the Islamic Development Bank Group, participated in the roundtable meeting of governors to discuss the proposal for establishing an innovative window for easy financing for the Bank’s least developed member countries. The meeting was held as part of the 49th annual meetings of the Bank Group in the Saudi capital Riyadh from April 27 to 30, coinciding with the Bank’s golden jubilee celebration marking 50 years since its establishment.

During the meeting, Dr. Hala El Said expressed gratitude to Dr. Mohammed Al-Jadaan, Minister of Finance of the Kingdom of Saudi Arabia and Chairman of the Board of Governors of the Islamic Development Bank, as well as Dr. Mohammed bin Sulaiman Al Jasser, Chairman of the Islamic Development Bank Group, stating that the session provided a good opportunity for dialogue, exchange of opinions, and sharing successful experiences among member countries regarding the proposal for establishing an innovative financing window for the Bank’s least developed member countries, numbering 25 out of the Bank’s 57 member countries.

Responding to a question about the governors’ opinion on establishing an independent window for easy financing to address the shortage of concessional resources directed by the Bank to its least developed member countries, Dr. Hala El Said praised the Bank’s proposal to establish an innovative financing mechanism for the least developed countries, especially in response to the call made by the governors at last year’s meeting. She explained that it represents a mechanism that emphasizes solidarity and cooperation among member countries, necessitated by the circumstances and challenges faced by many member countries, especially the least developed ones, in accessing financial markets and obtaining financing on the required scale and suitable terms due to their inability to bear the burden of debt.

El Said highlighted the repercussions faced by the least developed countries due to successive and interrelated crises in recent years, including the COVID-19 crisis, in addition to geopolitical crises, notably the Russo-Ukrainian crisis, alongside global inflationary pressures, especially in energy and food prices, regional crises, and the war in Gaza. She pointed out that these unprecedented crises have affected all countries without exception, whether least developed, middle-income, or developing countries in general.

El Said emphasized the importance of including financing for projects serving low-income groups or the most impoverished segments in middle-income countries, especially as these segments represent a large proportion of the populations of those countries. She added that these countries have been severely affected by the crises witnessed by the world in recent years, and they do not have sufficient financial resources to cope with the repercussions of those crises, in addition to the increasing financing gap, which hinders their efforts to achieve sustainable development goals.

El Said explained that global disruptions experienced in the past four years have led to an increase in the financing needs of developing countries in general, with financing gaps for these countries ranging between $2.5 trillion and $4 trillion annually according to the 2024 Sustainable Development Financing Report issued by the United Nations. She added that the expectations of the Organization for Economic Co-operation and Development (OECD) indicate a possibility of increasing the financing gap in developing countries by 56%.

El Said added that these gaps were already significant before 2020 but widened in recent years as a result of the COVID-19 pandemic and its subsequent shocks, negatively impacting resources, including declining tax revenues due to lower growth rates, as well as widening investment gaps and increasing financing needs.

She continued that financing gaps are experienced by the least developed and low-income countries, with financing gaps for each of these countries estimated at about 15-30% of gross domestic product, attributed to the limited resources in those countries and the weakness of available capacities to mobilize additional resources at the local level. She explained that the development financing gap is also one of the most important challenges facing middle-income countries, especially in light of the economic and geopolitical crises witnessed by the world in recent years.

El Said stressed the importance of the Bank examining existing mechanisms before establishing new ones, which can be developed and resource-enhanced in coordination with other partners to achieve this purpose, including the “Livelihood Fund,” which represents an innovative mechanism for resource mobilization and targeting the most impoverished communities in member countries through mixed concessional financing.

Responding to a question about the pace at which resources for the proposed window should be replenished, given that multilateral development banks replenish their resources every three or four years, Dr. Hala El Said addressed the Bank’s management’s direction to expand the sources and resources of that mechanism to include grants and charitable assistance from institutions, countries, and other sources. This contributes to mobilizing the necessary resources for the large-scale financing targeted or required for this window. She added that it is up to the Bank’s management to study the best scenarios for replenishing the resources of the window in light of the experiences of multilateral development institutions.

El Said emphasized the necessity for the sectoral targeting of this proposed mechanism with a high degree of flexibility commensurate with the needs and priorities of countries, adding that there are sectors that represent a common priority for a large number of member countries, including health, education, food security, water provision, and sanitation networks. She explained that these sectors have been severely affected, and their needs have increased due to successive crises.