Egypt initiates talks with EU, int'l partners on Macro-Financial Assistance 2nd phase

Ahram Online , Tuesday 14 Jan 2025

Egypt has initiated talks with the European Union and international partners on the second phase of the Macro-Financial Assistance mechanism, which includes 4 billion euros in budget support and 1.8 billion euros in investment guarantees.

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Minister of Planning, Economic Development, and International Cooperation Rania Al-Mashat shared this update during an extensive meeting with the National Press Authority, providing insights into the government’s programme for the next three years.

In January, Prime Minister Mostafa Madbouly announced that Egypt had received the first tranche of the European Union's 7.4 billion euros ($8 billion) financing package, totalling 1 billion euros.

This disbursement aligns with the strategic partnership agreement signed between Egypt and the EU in March 2024.

Al-Mashat also noted that the government successfully implemented 86 structural reform measures in 2024 to stabilize the Egyptian economy and improve the business environment.

These reforms enabled Egypt to secure budget support funding from development partners, including the European Union and the World Bank.

FDI and industrial strategy
 

Al-Mashat noted that the ministry is finalizing a comprehensive strategy to promote growth and sustainability, focusing on foreign direct investment (FDI) and industrial development.

She added that the ministry is working with the World Bank and relevant ministries to complete the FDI and industrial development strategies by the end of this year's first quarter (Q1).

Furthermore, she revealed that private investments increased by approximately 30.1 percent in Q1 of the current fiscal year, reaching EGP 133 billion. This represents 63.5 percent of total investments.

These positive trends reflect the government's efforts to foster a favourable environment for private sector growth.

However, public investments saw a significant decline, dropping by about 60.5 percent to EGP 99.7 billion, compared to EGP 180.4 billion in 2024.

National structural reform programme
 

Al-Mashat also discussed the ministry's progress overseeing the National Economic and Structural Reform Programme.

This programme, coordinated with various ministries and agencies and in partnership with international development organizations, aims to secure funding for budget support for structural reforms.

These reforms are designed to improve economic competitiveness, enhance the business environment, strengthen macroeconomic resilience to external shocks, promote the green transition, and create new opportunities for sustainable development.

 

 

The programme focuses on five key pillars:

  1. Ensuring macroeconomic stability through sound fiscal and monetary policies;
  2. Diversifying Egypt’s production base by prioritizing key sectors such as manufacturing, agriculture, information technology, and telecommunications;
  3. Improving competitiveness and the business environment to attract increased FDI;
  4. Supporting the transition to a green economy by investing in sustainable energy solutions and technologies;
  5. Strengthening labour market flexibility and efficiency and investing in vocational education and training systems to meet the demands of an evolving job market.
Optimizing public investment strategy
 

Al-Mashat also emphasized the ministry’s efforts to improve public spending efficiency and enhance the impact of public investments in achieving developmental outcomes.

Several measures have been taken to regulate public investments, reassess priorities for the FY2024/2025 plan, and ensure compliance with the EGP 1 trillion limit for public investments this year.

In addition, she clarified that the current year’s plan is being executed based on key priorities. These include securing investments for projects near completion, focusing on those over 70 percent finished, and excluding new projects that have not yet started.

Al-Mashat provided details on the structure of total investments for the FY2024/2025 plan, emphasizing a significant increase in overall investments, which is expected to approach EGP 2 trillion.

This includes EGP 1 trillion in public investments, approximately 50.3 percent of the total investments, and EGP 987 billion in private investments, or 49.7 percent.

More than two-thirds of public investments, or 42.4 percent, will be directed to human development.

This underscores the government’s commitment to development and its focus on empowering Egyptian citizens.

The water and sanitation sector will also receive 25.4 percent of public investments.

The Ministry of Planning, Economic Development, and International Cooperation has started preparing the draft of the 2025/2026 economic and social development plan, aligning it with the medium-term budget for 2025/2026 to 2028/2029.

The preparation process involves consultations and coordination with all relevant ministries, public authorities, governorates, the private sector, and civil society.

The planning process follows General Planning Law No. 18 of 2022 and Unified Public Finance Law No. 6 of 2022. The state’s general budget is based on a medium-term budget framework covering the current fiscal year and the next three years.

The goal is to integrate inclusive growth and sustainability principles to ensure that public spending supports comprehensive and balanced development, which aligns with the state's long-term national planning goals and medium- and short-term priorities.

 

 

In response to editors-in-chief and journalists' questions regarding future priorities, Al-Mashat highlighted the ongoing efforts to restructure the National Investment Bank to enhance its developmental role and resolve financial issues with other national entities.

She also affirmed the completion of debt settlements with the National Bank of Egypt and touched on the ongoing settlement discussions with the Egyptian Post Authority.

Additionally, the ministry is working to address the impact of economic conditions on the rising costs of public investments.

It also works on withdrawing financing from certain projects to allow private sector participation per the State Ownership Policy Document.

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