Support to Public Finance Management (PFM) Reform in Egypt

In recent years, Egypt has succeeded in establishing a macro-fiscal environment, during which time good progress has been made on budget consolidation, leading to more sustainable public finances.

Nonetheless, the COVID-19 pandemic and containing measures taken by the Egyptian government will have long-lasting consequences including fiscal consolidation and macroeconomic aggregates. The pandemic, in addition, will exacerbate the already high level of public debt and large financing needs in the country. The EU Delegation is providing extensive support to the Government of Egypt through different forms of aid. The provision of development cooperation requires regular monitoring through government policies and legislation in different domains of the fiscal situation (general and sector budget analysis, budget execution, budget transparency, budget comprehensiveness, revenue analysis, etc.) of public financial management (PFM) and of the macro-economic environment.

During 2019, the EU has deepened its PFM dialogue with the Ministry of Finance (MoF)of Egypt , which culminated with the finalization of a comprehensive package supporting public administration reform and PFM. The PFM component is expected to stimulate the implementation of medium-term PFM priorities, which requires, inter alia, the design of a program-based budget, the full architecture and governance of risk management, institutional capacity-building, and continued policy dialogue. This action, which is part of the Annual Action Plan 2019, will be launched in the near future. Other key international organizations and donors active in supporting the PFM reform process in Egypt are the IMF, IMF METAC, the World Bank, USAID, OECD, and OECD-SIGMA.

In this context, the overall objective of the assignment is to contribute to the PFM reform process undertaken by the Government and MoF of Egypt, taking into account the post-COVID fiscal context.

Specifically, the project is to support the Government of Egypt, and specifically the MoF and its affiliated entities in the path towards further reforming the PFM system as well as to support the EU Delegation on: (i) assessing the PFM reform in Egypt; (ii) updating the PFM annual monitoring reports; and (iii) drafting the Terms of Reference (ToR) of an upcoming EU action supporting PFM.

Inception Phase

• Documentation and preliminary analysis;
• Kick-off meeting with the EU Delegation and the MoF allowing full understanding of the expectations regarding the outputs, scope, and limitations of the project;
• Identification of needs;
• Definition of indicators for the project performance, in agreement with the EUD Project Manager;
• Draft inception report.

Component 1:

• Regular meetings and consultations with the management of the MoF and affiliated entities to agree on the scope of assistance and specific activities;
• Inform beneficiary institutions about the instruments of PFM reform, and stimulate demand for assistance in line with the priority areas of the project and the ongoing PFM reform;
• Coaching of the management and the staff of the beneficiary institutions to develop ideas and formulate their needs according to the standards and criteria required by the EU project;
• Trainings of the management and the staff of the MoF and affiliated entities in government-wide PFM frameworks and systems which may include MTBF, program budgeting, international taxation, public procurement and audit as potential areas for further cooperation; and
• Technical and legal advice to the MoF and its affiliated entities to support implementation of the PFM reform.

Component 2:

• Assistance to the EU Delegation in the process of budget support eligibility assessment;
• Preparation of the Terms of Reference for the upcoming technical assistance project financed by the EU;
• Assessment of the implementation of PFM reforms – updated PFM annual monitoring reports will be produced at the end of every calendar year;
• Assessment of post-COVID fiscal situation and PFM challenges (with policy recommendations);
• Facilitation of policy dialogue of the EU Delegation with the management of the MoF to support the PFM reform process; and
• Presentations and/or awareness sessions will be organized for the EU Delegation staff and other stakeholders on policy, budget, and PFM issues.

Reporting and Closing:

• Progress report, which will summarize all the activities implemented, any problems encountered, and mitigation measures taken as well as details on experts’ missions, analytical works done, summary notes on core technical and legal advice delivered and detailed information on training and capacity-building activities;
• Progress report produced every six months after the start of the project;
• Interim report with a description of the work and the outputs produced at the end of the first year;
• Draft final report: summary of all achievements and recommendations, drawing together the different strands of the work. The reports shall include: all of the results and outputs, recommendations for further EU interventions arising from the work, and all outputs prepared by the team members;
• Final report – after having received comments from the EU Delegation regarding the final report, the Team Leader will finalize the document and the full package with a final invoice and the financial report accompanied by the expenditure verification report will be submitted.