Its objectives, outcomes, and impact on Egypt’s economic reform path; how it expands fiscal space for human development and social protection, why it is linked to the National Structural Reforms Program, and how it helps reduce short-term debt burdens and extend debt maturities
The Ministry of Planning, Economic Development, and International Cooperation has reviewed a report on the nature and importance of concessional financing provided to support the State’s general budget, and its role in strengthening macroeconomic stability within the framework of implementing the National Structural Reforms Program. This financing contributes to improving the competitiveness of the Egyptian economy and supporting the transition to a green economy.
Below is a comprehensive overview addressing the most frequently asked questions about concessional budget support financing and its objectives.
What is concessional budget support financing?
Within the framework of the Integrated National Financing Framework (INFF) launched by the Ministry of Planning, Economic Development, and International Cooperation, the Government is working to reduce financing gaps, enhance resource allocation, and develop a roadmap for sustainable and innovative financing to mobilize public and private resources at both the domestic and international levels.
Concessional budget support financing is one of the key financing instruments included under the INFF. It is agreed upon with multilateral and bilateral development partners to provide low-cost financial resources to support the State’s general budget, in line with national economic and development priorities.
How does this financing support economic and structural reforms?
Concessional budget support financing is consistently linked to clearly defined structural reforms with specific implementation timelines. As such, this financing is an integral component of efforts to implement the National Structural Reforms Program, which aims to preserve macroeconomic stability, improve the business environment and investment climate, and accelerate the transition to a green economy.
These reforms are implemented in coordination with relevant national entities to maintain the positive momentum in Egypt’s economic performance. They span multiple sectors, including tax reform, trade facilitation, public investment governance, social protection, and enhancing industrial competitiveness, making them comprehensive in their economic, social, and environmental dimensions.
What is the direct impact of this financing on citizens?
This financing helps reduce financing gaps and expand fiscal space, enabling the State to allocate additional resources to priority development projects, particularly in human development sectors such as health, education, and social protection, as well as other essential public services.
Why is concessional financing considered less costly than other financing tools?
Concessional financing is among the least costly financing instruments available in international markets, due to lower interest rates compared to commercial financing, as well as longer repayment periods. This reduces fiscal pressure on the State budget and improves the structure of public debt by extending its maturities.
As a result, concessional financing helps alleviate short-term financial burdens by providing lower-cost alternatives, reducing reliance on high-cost financing tools, expanding fiscal space, and enabling greater spending on social programs and priority development projects.
What role does the Ministry play in this process?
Following the merger of the relevant ministries in July, the Ministry of Planning, Economic Development, and International Cooperation plays a central role in managing this file. The Ministry oversees the implementation of the National Structural Reforms Program in coordination with national entities responsible for executing the reforms.
It also leads negotiations with multilateral and bilateral development partners to link these reforms to the mobilization of concessional budget support financing and the narrowing of financing gaps.
Who are the key development partners providing concessional financing?
The concessional financing framework includes several multilateral and bilateral development partners, most notably the European Union, alongside the World Bank, the African Development Bank, the Asian Infrastructure Investment Bank, and bilateral institutions such as the Japan International Cooperation Agency (JICA) and the French Development Agency (AFD).
What is the total volume of concessional financing Egypt has secured in recent years?
Total concessional development financing agreed upon to support Egypt’s general budget amounted to approximately $9.5 billion during the period 2023–2026, in support of implementing the National Structural Reforms Program and strengthening macroeconomic stability.
What is the European Union’s contribution to budget support?
The European Union is one of Egypt’s leading development partners supporting the State budget. The EU’s Macro-Financial Assistance and Budget Support Mechanism for Egypt amounts to €5 billion, comprising a first phase of €1 billion and a second phase of €4 billion, within the framework of the Comprehensive Strategic Partnership between the two sides.
Is concessional financing disbursed in tranches linked to specific reforms?
Yes. Disbursement of concessional financing tranches is linked to the implementation of specific structural reforms. The first tranche of the second phase of the EU budget support mechanism, for example, was tied to the implementation of 16 structural reforms, which have already been completed in coordination with relevant national entities.
These reforms covered areas including public financial management, development of medium-term budget frameworks, financial risk and public investment management, enhancement of competitiveness and the business environment, as well as support for the green transition.