Budgeting in Egypt

2. Budget preparation

2.1. Structure of the budget

The Annual Budget Law contains annexes that include financial tables which set out the details of revenues and expenditures. There is also a comprehensive Budget Statement, which includes the macroeconomic assumptions underpinning the budget and the key fiscal aggregates, as well as the fiscal risks statement.

The published Budget presents four classifications that are in line with international standards: economic, functional, administrative and programme. The legislation makes the following provisions:

• The economic classification categorises expenditures and revenues according to the Government Finance Statistics (GFS) Manual 2001.

• The functional classification, which organises budget allocations according to sectors, is based on the Classification of the Functions of Government (COFOG) framework.

• The administrative classification groups expenditures by administrative entity, including the central Government, local administration units, and public service authorities.

• The programme classification establishes programme and performance budgeting by aligning expenditure programmes with national development objectives and strategic plans; each programme includes specific objectives, performance indicators, and resource allocations.

The Budget is approved by the Parliament and contains six Economic Chapters that are consistent with the GFS Manual:

• Wages and compensation of employees,

• Purchase of goods and services,

• Interest payments,

• Subsidies, grants and social benefits,

• Other expenditures,

• Purchase of non-financial assets (investments).

The PFM Law stipulates that beginning in FY 2027/2028, the budget shall be prepared and executed on a programme and performance basis. In the meantime, the budget is prepared and executed by economic classification. This is done in alignment with the objectives of the State’s general plan for economic and social development and its strategic priorities.

The 2025/2026 statement included for the first time a dedicated brief subsection outlining the gender-related implications of public spending for a selected programme of the Ministry of Higher Education. This reflects recent capacity-building activities with four pilot ministries to mainstream gender impact assessments across their programmes. The gradual expansion of the gender impact of policy initiatives to a broader set of line ministries is planned to continue and to be scaled up over the coming budget cycles.

2.2. Programme and performance budgeting

The transition to a programme and performance budgeting (PPB) approach by FY 2027/2028 is a key step in adopting a multi-annual framework that places the emphasis on policy objectives and the activities required to achieve them, as opposed to the traditional focus on expenditure inputs. This shift from an input-based system to a performance-informed budgeting process is guided by international good practices and has been reinforced through executive regulations, successive Budget Circulars, and technical guidance.

To support this transition, the authorities have begun to establish the institutional framework for PPB. Dedicated PPB and Programme-Based Planning units within the MoF and the MOPEDIC have been established. These units provide technical leadership, facilitate co-ordination across government, and guide the rollout of PPB reforms.

The MoF is developing the methodology and tools to operationalise this reform. In September 2024, in co-ordination with the MOPEDIC, MoF issued a detailed PPB Procedural Manual to support ministries in building programme structures, and identifying and reporting on performance indicators, as well as introducing important new concepts such as joint programmes and programme managers (Ministry of Finance of Egypt, 2024[5]). Moreover, the ministry is working towards the finalisation of a sequenced roadmap leading up to full implementation in FY 2027/2028, including milestones for refining programme structures, standardizing reporting, and integrating PPB data into the GFMIS.

The MOPEDIC has advanced several initiatives to operationalise PPB. These include the digitisation of programme and performance plans, integration into the national planning and monitoring system, and the rollout of the “Ada’a” platform, which tracks over 4,000 indicators across 36 ministries. MOPEDIC also issues quarterly “Ada’a” reports on government programme implementation, linking financial allocations to developmental outcomes, service quality, and citizen satisfaction. These tools strengthen the results orientation of budgeting and provide a framework for aligning resources with Egypt’s Vision 2030.

Since FY 2022/2023, ministries and budget entities have been required to draft programme budget submissions and the MoF has published programme annexes alongside the annual budget and year-end final accounts for information purposes. Although their value in fiscal decision-making is limited, and they are still evolving in scope and quality, the programme annexes published with the annual budget and year-end final accounts promote accountability and transparency. They represent a shift toward results-based budgeting by providing the public and Parliament with greater visibility into the government’s spending priorities and objectives. Programme structures are currently being updated to reflect the functional mandates of line ministries, remove duplications in programme titles, and ensure greater coherence and complementarity across ministries. MoF and MOPEDIC are also working to align their respective programme structures to support a unified, government-wide framework.

In addition, legislation requires each line ministry and independent public entity to establish its own PPB unit to design and cost programmes, monitor implementation and report on results. Since most of the unit members will come from the finance and strategic planning departments, this means strengthening the existing capacities within these departments and ensuring close co-ordination with the MoF. This approach reinforces the link between policy objectives and resource allocations while avoiding unnecessary duplication of structures. Progress in operationalising these PPB units and strengthening co-ordination with central authorities varies across line ministries. Advancing these internal mechanisms will be critical to ensure full functionality and coherence across the system.

While ministries are making progress in identifying outputs and outcomes and sharing them with MoF and MOPEDIC, the systematic use of performance information in budget formulation, negotiation, and execution is still in its early stages. Many performance indicators remain input- or activity-focused, and their relevance for policy dialogue or oversight is limited. Ministries continue to face challenges in costing their programmes, in justifying requests based on performance data, and using results to inform internal resource allocation. Furthermore, programme budgeting presently applies to the annual budget only. With the full establishment of an MTBF, budget entities will be required to submit medium-term projections in both formats. While awareness and buy-in have significantly grown in light of MoF efforts, further capacity-building will be required at both the central and line ministry levels to institutionalise the reforms.

Currently, the MoF negotiates the budget with budget entities in line-item format, and performance data is not yet used to guide resource allocation. To address this, MoF plans to strengthen the link between results and funding decisions. Key next steps include issuing standardised performance reporting templates, refining programme structures, and supporting Parliament in using performance data more effectively in budget scrutiny. A major milestone will be the integration of PPB into GFMIS, which is ongoing and expected to be completed by the end of 2026. This should enhance data credibility and streamline reporting.

A supportive technical environment is essential to embed PPB into the core budget process. The draft roadmap identifies a range of enabling actions and capacity building needs. However, a framework for indicator validation, quality assurance and monitoring between MoF and MOPEDIC is yet to be agreed. There is also currently no central entity responsible for policy evaluation across the Government. Addressing these gaps would enhance the ability of stakeholders, both within and outside government, to engage more effectively in monitoring performance and supporting accountability for results.

The efforts by the MoF to rationalise and align programme and sub-programme structures including the creation of “joint programmes” represent a step towards better co-ordination across entities. However, the new “joint programmes” are still embedded within the individual programme architectures of each line ministry, rather than being jointly managed. Over time, these joint programmes could be operationalised to enhance collaboration, reduce duplication, and strengthen the link between resources and results, in line with OECD practice.

Initially, the MoF plans to implement performance budgeting primarily for presentation purposes. This reflects a pragmatic recognition of Egypt’s constitutional requirement for the annual budget to be approved by Parliament according to six economic chapters, rather than programme structures. As such, spending entities will have to submit their budgets in both line-item and programme-based formats. While the two structures are currently maintained in parallel, international experience suggests that greater integration is both feasible and beneficial, often enhancing relevance and coherence without imposing undue administrative burdens on budget entities.

2.3. Spending reviews

The expenditure baseline for the current year usually serves as the starting point for preparing the budget. Spending reviews help governments to manage public spending by examining the existing stock of expenditure and reallocating resources where appropriate. The purposes of a spending review include:

• Allowing the government to manage the overall level of expenditure;

• Identifying opportunities for savings and reallocations;

• Improving effectiveness within expenditure programmes and policies.

Integrating spending reviews within the annual budget process increases the likelihood of resources being allocated efficiently and effectively. A regular review process provides a structured approach to ensure that the proposed budget is based on accurate and up-to-date information, while enabling discrepancies to be identified and addressed. The spending review process also strengthens accountability by providing feedback on how budget commitments from previous years have been implemented.

Spending reviews have become a core instrument for expenditure prioritisation and reallocation and a permanent feature of the budget process in many OECD countries (OECD, 2023[6]). As of 2023, nearly all OECD countries (97%) had conducted at least one spending review, with 29 countries (82%) carrying out spending reviews on an annual or regular basis (Figure 3).

Figure 3. Spending reviews in OECD countries, 2023

Source: 2023 OECD Survey on Spending Reviews.

In the context of Egypt’s ongoing PFM reforms, the MoF could establish a systematic spending review process to regularly assess baseline expenditure, reprioritise and reallocate spending, identify fiscal space, and improve the effectiveness and efficiency of programmes. Egypt already has experience with Spending Reviews, having piloted three spending reviews in FY 2020/2021, which were on health, education, and social protection. The main objective was to improve spending effectiveness and efficiency in these sectors. While the initial analysis was robust, the pilot was not expanded to other sectors. A follow up exercise on the implementation of the recommendations was undertaken in FY 2024/2025 but the results have not yet been published.

Spending reviews remain at the pilot stage with no formal integration into the budget calendar and no link to resource reallocation or reprioritisation. A dedicated unit to lead or co-ordinate spending reviews has not been established, limiting the prospects for advancing spending reviews in the immediate future.

Nevertheless, spending reviews can be instrumental in addressing Egypt’s fiscal challenges. They can target programmes that have historically faced budgetary pressures or no longer align with the Government’s strategic priorities. Spending reviews can also complement Egypt’s programme and performance budgeting framework. Information from programme and performance budgeting can help identify spending areas that merit review. In turn, well-designed spending reviews can improve the quality of analysis, ensuring that findings are both realistic and actionable.

The MoF should work with line ministries to gradually develop a programme of spending reviews to ensure that all major areas of expenditure are examined over a specified number of years. Such a programme could include tax expenditures, which also can impact on the efficiency and effectiveness of government programmes. In the short term, the MoF could:

• Secure strong government support for spending reviews by highlighting their fiscal and policy advantages. Engage key stakeholders early on, including line ministries, to foster a sense of ownership and establish incentives for spending units to actively participate in the process.

• Create an implementation framework for spending reviews, including a detailed methodology and clearly defined roles and responsibilities throughout each stage of the process. Prioritise reviews in sectors with significant fiscal impact and potential inefficiencies. Select areas where reliable data is readily available to minimise complexity and build trust in the process.

• Collaborate with external experts to strengthen internal capabilities. Draw on the knowledge of peers, consultants, and international bodies on best practices for conducting spending reviews and build sustainable in-house expertise.

• Revise and improve the spending review framework over time based on lessons from initial pilots, ensuring it remains effective, adaptable, and aligned with government objectives and evolving fiscal priorities.

Box 1 outlines examples of spending review practice in two OECD countries. In the Netherlands, spending reviews have been used for decades and benefit from political commitment and support, anchored in the government’s Coalition Agreement. The Greek example reflects the versatile nature of spending reviews, where they have evolved from a top-down exercise focusing on quick savings into a more collaborative process between the MoF and line ministries. The experiences in these countries could be particularly useful for Egypt: the Netherlands for its strong political leadership and Greece for how spending reviews initially delivered quick savings but have evolved into a core element of the budgeting process.

Box 1. Examples of spending reviews in OECD countries

Spending Reviews in Greece

In response to the 2008 financial crisis, Greece introduced spending reviews as a key fiscal tool. The initial reviews were characterised by a rigorous, top-down approach led by the Ministry of Finance, primarily aimed at identifying cost-saving opportunities to restore fiscal sustainability. Over time, the scope has expanded beyond savings to also emphasise the quality and effectiveness of spending, with increased participation from line ministries.

Greece has institutionalised spending reviews as a permanent technical exercise that generates savings proposals to be integrated into the annual budget process. This includes evaluating savings and reallocation options, assembling a set of possible measures for each review, and having ministers select the measures to be implemented in the forthcoming budget cycle.

Spending reviews in the Netherlands

The Government formation process includes a coalition agreement that outlines the approach to spending reviews. This agreement sets the priorities and focus areas for the Government’s spending review programme throughout its four-year term. Although the coalition agreement holds political weight, it serves as guidance for the executive branch and does not carry formal legal authority from parliament. Political leadership is reflected in key steps within the spending review process:

• The Cabinet selects the specific topics or government sectors to be reviewed, guided by current Government priorities and political considerations.

• The Cabinet approves the scope and terms of reference for each spending review and publishes these alongside the Budget Memorandum, including instructions on how the review should be conducted.

• The Cabinet decides which recommendations from the spending review will be adopted. The analytical work supporting the review is conducted by an independent, non-political team co-ordinated by the Ministry of Finance. Both the team’s report and the Cabinet’s final decisions are made publicly available.

2.4. Capital budget

Capital budgeting in Egypt is structured around a clear division of roles between two core ministries, whereby the MoF ensures macro-fiscal discipline and the MOPEDIC safeguards project-level discipline. MoF records all investment outlays within an overall ceiling for Chapter 6 of the State Budget and ensures alignment with aggregate fiscal targets. MOPEDIC allocates that ceiling across line ministries and public bodies, and monitors delivery against the medium-term development plans required under Planning Law 18/2022.

Every line ministry submits its priority projects to the MOPEDIC through the Integrated System for Investment Plan Preparation and Monitoring (ISIPPM). The ISIPPM differentiates between ongoing and new projects, records Cabinet-approved budget adjustments, and is scheduled to link with GFMIS in the second half of FY 2025/2026, which would allow MoF real-time monitoring of commitments and disbursements.

Proposals must align with sector strategies and the Egypt Vision 2030. The process includes both self-financed investments, funded by public entities’ own revenues, and investments supported through the state budget. Once consolidated, these submissions form the basis of the National Investment Plan, which provides a comprehensive overview of all planned public investments. To strengthen integration, MOPEDIC now provides MoF with the approved investment projects electronically at the project level. This covers all implementing entities, and includes comprehensive financial, physical and technical data.

In the past decade Egypt experienced a surge in infrastructure investment up to FY 2021/2022, when capital spending accounted for 18% of total expenditure (Table 3). Since then it has fallen, reaching just under 10% in FY 2025/2026. At the same time, execution rates dropped from over 90% of planned levels in FY 2021/2022 to 53% in FY 2023/2024, recovering to 77% in FY 2024/2025. This derives primarily from tighter fiscal conditions, where the Government mitigated the impact of operational expenditure overruns by significantly reducing capital expenditure. However, it potentially also points to entrenched challenges in project appraisal and implementation planning. Furthermore, using capital spending as the adjustment variable to maintain aggregate fiscal targets, compromises the efficiency and strategic focus of public investment. These challenges are consistent with the findings from the OECD’s 2024 Public Governance Review of Egypt (OECD, 2024[7]).

Table 3. Capital expenditure in Egypt, 2021-2026

	2021/2022	2022/2023	2023/2024	2024/2025 (estimate)	2025/2026 (budget)
Total expenditure (in million EGP)	1 831 022	2 184 594	3 055 194	3 904 865	4 573 963
Capital expenditure (in million EGP)	329 730	288 987	311 738	386 900	434 894
Share of capital expenditures from total expenditures (%)	18	13.2	10.2	9.9	9.5

Source: Ministry of Finance

To address these challenges, MOPEDIC has strengthened the institutional framework for capital budgeting to ensure strategic discipline in public investment planning. In 2024, MOPEDIC issued a Guide for preparing the Annual Economic and Social Development Plan, setting out project-selection criteria and introducing more rigorous requirements for projects above EGP 500 million (EGP 50 million for local governments). MOPEDIC established appraisal criteria for both new and ongoing projects, applying defined criteria and weights that cover feasibility, cost accuracy, financing sources, environmental standards and social returns. The inclusion of these criteria into the preparation of the MTBF is designed to embed multi-year capital envelopes and align project scheduling with available fiscal space. At this early stage, however, quality assurance concerning the application of the criteria cannot be guaranteed and capacity building in this field should be a priority (OECD, forthcoming[8]).

In addition, a legally mandated National Single Project Pipeline (NSPP) is being designed to constitute the exclusive list of priority investments. The enhanced evaluation mechanisms are intended to ensure that only technically sound, cost-effective, and strategically relevant projects are admitted into the investment pipeline. Oversight will be provided by the new Council for Planning and Sustainable Development, led by the President, with MoF and MOPEDIC serving as joint secretariat. Once populated, the NSPP will guide investment oversight and strategic consistency across ministries. Operationalising the NSPP with objective selection criteria, such as economic rate of return, climate impact, and implementation readiness, will also reinforce the strategic allocation of resources.

To contain fiscal risk, the Government capped total public investments (funded by budget entities and privately sourced) at EGP 1 trillion for FY 2024/2025, a ceiling which was respected, at EGP 922 billion. It also established a Technical Secretariat, chaired by MOPEDIC with MoF and ASA participation, to monitor implementation of projects on a quarterly basis and to apply objective criteria to projects, thereby establishing a more disciplined and transparent governance framework for public investment. The Secretariat collects data and prioritises projects that are more than 70% complete, with less-advanced initiatives being deferred or frozen to focus resources on finishing key investments. Project management could be further improved if the authorities activated the carry-forward provision (as provided by the Executive Regulations of the PFM Law), within defined limits, to provide ministries with the flexibility to manage project delays without undermining fiscal discipline.

The authorities have been developing sectoral strategies to guide public investment decisions but the quality and consistency varies across ministries. While some ministries, such as Health, Education and Transport, have developed evidence-based strategies with objectives, performance indicators, and links to national development priorities, others lack the same level of detail and rigor. The absence of harmonised standards for strategy preparation and evaluation has contributed to fragmented planning and reduced the ability to prioritise projects aligned with sectoral outcomes. The National Narrative for Economic Development, launched in April 2025, provides a unified strategic framework that aligns sectoral policies with Egypt Vision 2030 and national development plans, strengthening co-ordination, reducing policy fragmentation, and ensuring consistency across fiscal, investment, and sectoral reforms to support sustainable and inclusive growth. It is supported by an integrated monitoring framework and SDG data platforms that track implementation and performance, align sectoral and investment priorities with national objectives, and enable evidence-based decision-making and timely corrective action. Building on these improvements to strengthen the coherence of sector strategies, including unified guidance on their structure and alignment with the MTBF and the NSPP, would see capital allocations being targeted towards high-impact and sustainable investments. It would also enable ministries to define meaningful programme structures and performance indicators for PPB. This approach would further reinforce the role of sectoral strategies as a bridge between national development plans and the annual budget process.