Budgeting in Egypt

3. Budget execution, control and reporting

3.1. Cash and debt management

The PFM Law requires all central-government agencies and the Economic Authorities to operate through the Treasury Single Account (TSA) at the Central Bank of Egypt. Full integration of the TSA with the GFMIS allows daily consolidation and reconciliation. The number of central government bank accounts fell from about 61 000 in 2017 to less than 5 500 by 2020 as the TSA roll-out advanced. In addition, the PFM Law prevents the creation of new extra budgetary accounts (special accounts and funds) except through a new Act.

The remaining special accounts and funds increasingly are being taken into the TSA, enhancing government liquidity and control. Since FY2013/14 there has been a succession of legal provisions compelling each fund to transfer up to 15% of its monthly inflows and/or to remit a once-off percentage of accumulated assets to the State Treasury. These measures are now more structured, with budget laws and special legislation providing for monthly revenue transfers and one-off remittances of accumulated balances. These measures have created a more unified system of cash management by widening the TSA base. The continued consolidation of government cash into one TSA is important.

The Treasury permits monthly cash releases in twelfths. Line ministry finance directorates submit monthly cash-flow forecasts by the 5th working day of the month, which the Treasury aggregates to analyse expected inflows and guide short-term borrowing. Monthly commitment ceilings are enforced in the GFMIS and adjusted only with MoF approval. These controls work well for budgetary resources, but self-financed accounts, such as hospital service fees, university tuition and research revenues, and own revenues of certain Economic Authorities, sit outside the ceiling regime, leaving scope for unmonitored obligations. Extending commitment controls to cover self-financed accounts would help entrench the discipline gains already achieved and provide a more complete picture of fiscal risks.

Egypt has made important progress in addressing its complex web of inter-agency debts and a cabinet-level committee is addressing longstanding obligations among the National Investment Bank (NIB), the Social Insurance Fund (SIF) and state-owned enterprises. Over decades, the NIB used surpluses deposited by the SIF to lend to state-owned enterprises such as the Egyptian General Petroleum Corporation and the Electricity Holding Company which were often unable to repay their debts, leaving the NIB unable to repay the SIF. To untangle these liabilities, the Government enacted the Social Insurance and Pensions Law (Law 148/2019), which by a combination of cash payments and securitisation has stabilised pension payments while gradually restructuring the State’s historical liabilities.

However, in Egypt further steps are needed to strengthen transparency and prevent new arrears from emerging. There is still no harmonised definition of expenditure arrears, nor systematic disclosure of the stock of arrears, leaving an incomplete picture of outstanding commitments across the broader public sector. A unified balance sheet and transparent arrears data would facilitate more accurate forecasting, expose emerging payment delays early, and give Parliament and the Supreme Audit Institution a solid basis for oversight.

Debt operations are centralised in the MoF’s Public Debt, Grants and Financing Sector. The MTDS 2026 - 2029 was adopted in January 2026, setting a clear path for debt sustainability, including a target to reduce the debt-to-GDP ratio to below 80% by June 2027. An Annual Borrowing Plan for FY 2025/26 operationalises this medium-term strategy, aligning financing decisions with budget targets and supporting diversification of financing instruments. A front-office Debt Management Unit conducts auctions and external borrowing, while middle-office (responsible for risk analysis and ensuring consistency of front-office transactions with the government‘s debt strategy) and back-office (covering settlement of payments, as well as accounting and reporting) functions are still being built around the forthcoming Debt Management and Financial Analysis System (DMFAS) and new operating manuals. The roll-out of DMFAS, including its guarantee and on-lending modules, will institutionalise risk analysis. Recruiting a middle-office will enable more regular measurement of market, rollover and contingent-liability risks. Automated dashboards fed by DMFAS can support interest-rate, exchange-rate and refinancing risk analysis underpinning the updated MTDS, while also strengthening monitoring of concentration risks in the Treasury-bill portfolio. Over time, these tools can help shift debt management from a transactional function toward a more strategic approach.

By anchoring these reforms in clearly defined legal thresholds and day-to-day operating rules, the MoF translates broad fiscal intentions into measurable limits that Treasury staff, auditors, and markets can monitor. Key parameters in force include a liquidity buffer limiting the TSA overdraft to 10% of average revenues over the past three years, ceilings on net domestic financing to underpin the debt-reduction path, as well as the requirement for sub-national entities to seek MoF approval for all borrowing or guarantees. Regular debt bulletins and an annual General Government Debt Report have improved transparency.

There are measures underway to migrate from GFS 2001 to the GFS 2014 framework. The Egyptian current definition of general government includes not only the SOEs and Economic Authorities that are non-profit but also those that are for profit. However, the MoF and MOPEDIC are conducting a joint exercise to ascertain whether each SOE and Economic Authority should be considered as for profit or non-profit, after which only non-profit institutions will be included within the general government classification. Conforming to the GFS 2014 general government debt definition will provide an internationally recognised benchmark for assessing the Government’s commitment to lowering the general government debt ratio below 80% of GDP by FY 2028/29.

These reforms have tightened Egypt’s grip on cash and debt management. If fully implemented, these actions will transform recent process improvements into a durable institutional framework capable of delivering effective liquidity management and stronger market confidence.

3.2. Budget flexibility and execution

Egypt’s budget execution framework strikes a balance between stability and in-year adaptability. Parliament typically passes only one supplementary bill late in the fiscal year, which fine-tunes existing allocations from its original budget, rather than rewriting fiscal policy. Within this steady envelope, the legislation allows for reallocations within the same chapter or programme and establishes a graduated ladder of virement powers. Specifically, it provides for

1. up to EGP 10 000 per reallocation (or 10% of the receiving line) being approved by the head of entity;

2. higher ceilings (up to EGP 400 000) with the approval of successive MoF financial controllers; and

3. anything beyond those figures requiring the Minister of Finance’s direct or delegated approval.

Furthermore, total in-year virements may not exceed 10% of the original chapter appropriation or 1% of total State-budget expenditure.

Entities therefore may shift modest sums between line-item details of the same economic chapter or programme. Larger movements require successively higher sign-offs, first from the relevant Budget Sector head in the MoF, then from the Vice-Minister for Fiscal Policies. Any transfer between economic chapters or programmes go to Cabinet and, ultimately, to Parliament because it amends the Budget Law itself. This framework will protect fiscal discipline while still allowing entities to adapt to shifting operational realities in line with OECD practices. However, while these flexibility arrangements have a legal basis, they are not yet applied in practice owing to the legislation being introduced in 2024. The authorities should seek to implement them, which would give line ministries greater flexibility to manage programmes during the year.

In line with OECD practice, reserves in the budget provide an important tool for in-year flexibility and are governed by clear access criteria set annually by the Cabinet. Egypt’s Annual Budget Law appropriates two central reserves: a current reserve for minor adjustments and under-budgeted items, and a general contingency for unforeseen shocks. In FY 2024/25, for example, the criteria for the current reserve covered price increases in contracted goods and services, administrative costs arising from regulatory changes, and wage adjustments within centrally approved limits. The general contingency was earmarked for natural disasters, health emergencies, and unexpected macroeconomic shocks such as sudden exchange-rate volatility.

Furthermore, flexibility between fiscal years remains highly constrained. Unlike the practice in many OECD countries, unspent appropriations lapse at year-end, and ministries cannot carry them forward to the next year without explicit parliamentary authorisation or a Special Decree that permits exceptions for multi-year investment projects or wage allocations pre-cleared by MOPEDIC or the CAOA respectively. Such cases are rare. While this rigid approach reinforces fiscal discipline and aligns with the MTBF’s goal of containing aggregate expenditure, it can also create operational challenges for ministries implementing multi-year programmes or facing procurement delays. As recommended in Section 2, introducing a carry-forward provision within defined limits would provide ministries with the flexibility to manage their programmes. Addressing these challenges while maintaining fiscal discipline will demand cultural change and enhanced capacity at the institutional level in estimating policy costs so that ministries can plan and justify their medium-term spending more effectively.

3.3. Internal control

Egypt operates a multi-layered internal-control system for GFMIS transactions that mirrors the Institute of Internal Auditors (IIA) “three-lines of defence” model (Institute of Internal Auditors, 2020[9]). They are underpinned by the PFM Law and its Executive Regulations. The first line involves the implementation of pre-payment controls by each administrative entity to manage day to day risks. The second requires the MoF to provide oversight and guidance, along with risk-based inspection. The third sees independent assurance being delivered by an IA Unit and the ASA, which is considered in Section 4.2. This structure has tightened discipline and brought practice closer to OECD standards.

Egypt’s first line of control obliges every administrative entity to design an internal control system that safeguards assets, enforces policy compliance and ensures reliable financial reporting. It also specifies the fundamental principles: segregated duties, rotation of finance staff, risk registers, workflow charts and periodic inventories of cash, stores and fixed assets. To operationalise these requirements, in 2020 the MoF issued a Unified Manual of Pre-Disbursement Financial Controls, which maps each GFMIS step, lists procurement and payment check-points and prescribes the monthly bank/ledger reconciliation to be used by all accounting units. This is consistent with OECD Budgetary Governance guidance that effective execution begins with clear, documented internal controls. (OECD, 2015[10])

The second line tasks the MoF with applying pre-payment controls in real time by MoF accounting units resident in the administrative entities. These resident controllers must approve every commitment and payment, supervise local accounting staff and block any transaction that breaches legality or appropriation limits. Moreover, the MoF Central Inspection Directorate conducts post-payment reviews using the entities’ risk registers to select the operation to inspect. However, updates to the inspection rota remain uneven and special accounts and transactions falling outside the GFMIS regime are not subject to inspection.

The third line is provided by the entities’ IA Units, which were established in accordance with Prime Ministerial Decree 1146/2018 and assigned roles and responsibilities within each entity by a succession of decrees since then. Despite this, IA development across the administrative entities is not well advanced although in the MoF at least, some progress has been made.

Within the MoF the IA Unit is a general department that reports directly to the Minister. It has adopted the Institute of Internal Auditors IIA standards as its methodological framework. It has developed a formal charter and ethics code, which was endorsed by the Minister in November 2024. The unit also has launched an online disclosure portal and introduced risk-based annual planning. Between 2019 and 2023, it has completed engagements covering MoF headquarters, two sectoral departments, specialised units, and two MoF affiliates, completing around 80% of its planned activities. These achievements have raised awareness of internal audit as a tool for strengthening governance and accountability and reflect progress toward OECD good practices in embedding independent assurance within the MoF.

However, even within the MoF, the IA function needs to be further strengthened. The Unit is under-resourced, with only about seven to ten auditors to cover the entire Ministry and its affiliates. None of the auditors currently holds an internationally recognised IA certification, which constrains the use of advanced audit methodologies. Field teams have reported difficulties in obtaining required documentation from some auditees, undermining the quality of their work. Furthermore, the Unit has yet to undergo an external quality assessment, which IIA standards require every five years to validate conformance with international best practice. Addressing these gaps, would help align MoF’s IA capability with OECD standards for robust, independent assurance.

3.4. Financial monitoring and reporting

The Constitution and the PFM Law provide the legal framework for financial monitoring and reporting. This framework establishes a standardised reporting forma to be followed by each public entity, thereby enabling public financial information to be presented accurately and comparably. The PFM Law Executive Regulations define the accounting standards to be applied. Currently, central government accounts are prepared on a cash basis, whereas Economic Authorities and public entities apply accrual accounting standards. Budget execution reports are published on a monthly, a mid-year and annual basis.

The Constitution assigns the ASA responsibility for the oversight of State funds, the State budget, and independent budgets, as well as for auditing the annual financial statement. It stipulates that the audited annual financial statement must be submitted to Parliament within six months of the end of the fiscal year.

The central government’s annual financial statement (final account) is comprehensive in scope, including social insurance funds, and mirrors the budget’s presentation structure. It provides explanations for variances from original allocations by spending bodies and reports on the implementation of capital projects. It also includes information on state guarantees, borrowing, and debt, and contains a chapter linking budget appropriations to objectives and results. However, the coverage of state guarantees, assets, liabilities and arrears is not comprehensive. Also it is not based on International Financial Reporting Standards (IFRS). Instead, it applies domestic accounting standards, which have been developed to align with IFRS to a significant extent, with some modifications to reflect the Egyptian context. The ASA has recommended adopting IPSAS 24, which includes explanatory information on deviations from planned budgets, to enhance transparency and monitoring. The PFM Law requires the ASA audited report on the annual financial statement to include a balance sheet of administrative entities but this will require full accrual accounting to be adopted.

The Financial Monthly Report, which is published on the MoF website within four weeks of the end of each month, provides revenue and expenditure information. It presents central government data at the chapter and sub-chapter level, and includes consolidated general government data at the chapter level. However, it does not provide information at the institutional level. It includes comparisons to the same period in the preceding year but does not compare actual versus planned revenues and expenditures, making it difficult to identify emerging deviations from the budget. Publishing a monthly financial profile at the start of the fiscal year as a reference point would facilitate such analysis. The Financial Monthly Report also contains details on the central government debt profile, including domestic and external debt, average debt maturity, and net issuances of T-bills and bonds. However, the information lags by up to twelve months, and the reports provide minimal narrative analysis.

The Mid-Year Review presents revenue and expenditure data for the first six months of the fiscal year along with the government’s analysis. While the macroeconomic forecasts are updated, and all of the differences explained, there are no updates to revenue and expenditure estimates for the remainder of the fiscal year, so the scope for debate is limited.

The establishment of the GFMIS facilitates better monitoring and control of public spending, enabling MoF officials to track financial transactions across administrative entities. Ministers, governors, heads of courts, and administrative bodies have access to the system, ensuring enhanced oversight of financial performance and compliance with budgetary commitments. Nevertheless, the capacity for comprehensive financial reporting to the MoF, particularly at the local government level, remains limited. Data on local government arrears are incomplete, making it difficult to assess their fiscal health. The authorities should require regular financial reporting from all municipalities to enable more comprehensive monitoring. Even if the MoF lacks the resources to analyse all reports in detail, it could apply a sampling approach each year to identify weaknesses and progressively improve reporting quality.

Law No. 144/1988 on the ASA requires the annual financial statements of SOEs to be audited. However, many SOEs do not submit audited statements to the MoF or their sponsoring ministries. A consolidated report on the financial performance of the SOE sector is not published annually. Given the potential fiscal risks associated with SOEs, strengthening monitoring and reporting requirements, both at the entity and sectoral level, should be a priority.

A programme-based budget report is published annually in spreadsheet format. This can be compared with the programme-based presentation of the planned budget, which is also published. While programme budgeting is not yet fully integrated into the Egyptian budget process, these reports provide a foundation for assessing performance as programme and performance budgeting becomes mainstreamed.