Egypt Macro-Economic Stabilization and Reform (MESR)
Recent years have seen the Egyptian economy struggle to stabilize, with weak economic governance at the macro and microeconomic levels, contributing to distortions that have hampered private sector growth and dampened Egypt’s economic development. The recent devaluation of the Egyptian pound has helped to encourage foreign direct investment and increased exports, but there remain macroeconomic issues, such as the public debt and high inflation, that continue to inhibit economic growth in Egypt.
The Macro-Economic Stabilization and Reform (MESR) project, funded by the U.S. Agency for International Development, will address Egypt’s macroeconomic challenges, assist with implementing reforms expected by the International Monetary Fund (IMF), and set the stage for broad-based economic growth and achievement of the Sustainable Development Strategy 2030. The IMF’s arrangement under its Extended Fund Facility (EFF) with Egypt creates a sense of urgency for reforms and encourages government champions to take ownership. Complementing the EFF arrangement, MESR will focus on human capacity building and institutional development to promote sustainability of reforms and empower government staff to improve capital investment processes and the effectiveness of public finance systems. Stakeholders and counterparts include the Ministry of Finance (MOF), the Ministry of Planning (MOP), Egyptian tax authorities, economic think tanks, universities, the private sector, and international organizations working in public financial management.
MESR will also work with the Government of Egypt to analyze, monitor, and evaluate the impact of public investments and economic policies on men and women, while ensuring that women are well represented in training and capacity development efforts, engaged in economic policy dialogue, and prepared for managerial and leadership opportunities. While ambitious in its expected results, MESR comes at a critical time for Egypt and will provide invaluable technical assistance to support macroeconomic stabilization. The project is organized around two objectives:
- Improved public investment planning, implementation, and monitoring and
- Upgraded effectiveness of public financial management.
For component 1, key project activities will include improving the process of capital investment planning and appraisal, developing alternative financing schemes, implementing a continuous improvement system, upgrading the monitoring and evaluation of capital investments, and enhancing coordination between the MOP and MOF in budget planning and formulation. For component 2, key project activities will include improving government’s cash management, reforming budgeting processes to achieve program results, enhancing tax administration forecasting, and developing improved capacity to address fiscal risks. The project will need expertise in Macroeconomics and financial risks, tax administration and policy, revenue forecasting, government accounting, capital investment and program budgeting among others.
Assistance from the project will enhance government capacity and support better-functioning institutions, thus encouraging a virtuous cycle of economic growth in Egypt that supports private sector development, increases international competitiveness, decreases public debt, and reduces poverty.
- Review outstanding capital investment projects and incorporate lessons learned from this initiative into the development of a standardized appraisal methodology.
- Develop cross-sector, spatial, and gender analysis tools to improve decision support for project appraisals.
- Analyze and assess different forms of alternative financing schemes.
- Conduct legal and regulatory review of the public investment landscape.
- Develop and conduct training to build capacity for planning and monitoring units in government entities.