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 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, addresses Egypt’s macroeconomic challenges, assists with implementing reforms expected by the International Monetary Fund (IMF), and sets the stage for broad-based economic growth and achievement of the Sustainable Development Strategy, Egypt Vision 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 focuses on human capacity building and institutional development to promote the sustainability of reforms and empowers government staff to improve public investment processes and the effectiveness of public finance systems.

MESR also works with the Government of Egypt to plan and budget for development programs to ensure social inclusion. MESR analyzes, monitors, and evaluates the impact of public investments and economic policies on men, women, children, the elderly, and those with disabilities—and ensures that women in particular 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 provides invaluable technical assistance to support macroeconomic stabilization.

Sample Activities

• Support the Government of Egypt to institutionalize its new Unified Fiscal Law.
• Design and pilot a participatory budgeting initiative, which the Government of Egypt plans to scale nationwide.
• Design a statewide strategic management system to monitor Egypt’s progress in achieving its Sustainable Development Strategy (Egypt Vision 2030).

Select Results

• Pioneered a new methodology for calculating Egypt’s gross domestic product based on the country’s economic census results, decreasing the residual components and deflating added value from economic sectors that resulted in a significant gross domestic product increase.
• Supported Egypt to increase its score on the Open Budget Index.
• Supported the Government of Egypt to transition from line item–based budgeting to program-based budgeting.
• Developed the Egyptian Governorate Competitiveness Index to foster positive competition among governorates and spur private investment into their competitive economic sectors.
• Developed an automated system for public investment management and supported its linkage with the Ministry of Finance’s budget system, enabling real-time exchange of information.