Govt committee recommends restructuring economic authorities to align with IMF recommendations, better track debt

In what could be an overhaul to the state economic structure, a government committee recommended on Monday the merger and dissolution of some of Egypt's economic bodies.

The recommendation — just one part of a multi-phase review kicked off in May that still requires a final report to be submitted to the Cabinet — would see one entity dissolved, three entities merged with others and seven converted into public bodies. 

The reform measures come amid pressure on the government to ensure clearer budgetary data, a key requirement in the loan agreement with the International Monetary Fund. However, government entities — including the National Railways Authority and the National Media Authority — are outside the scope of the general budget, which makes keeping track of the significant losses they often incur difficult.  

MP Mohamed Badrawy, a member of the House Planning and Budget Committee, called Monday’s decision a step in the right direction. Speaking to Mada Masr, Badrawy noted that economic bodies have become a significant problem, as most incur losses despite their primary purpose being to generate profits and ease the burden on the state budget.

The National Railways Authority and the National Media Authority have incurred some of the steepest losses in recent years. 

The government established the committee to review the status of 40 of Egypt’s 59 economic bodies.

This committee was formed weeks after amendments to the unified public finance law were introduced. Amendments included incorporating economic bodies into the state’s general budget under the framework of a "general government budget,” while keeping their individual budgets separate. This was part of the government’s agreement with the International Monetary Fund to adopt standards outlined in the funding institution’s Government Finance Statistics Manual, which sets criteria for presenting budgetary data.

In its third review in August, the IMF recognized the legislative amendments introduced by the government with approval but noted the absence of sector-based classifications for economic bodies. It recommended applying World Bank standards. The classifications were expected to be completed by the end of September.

A parliamentary source who spoke to Mada Masr on condition of anonymity described the IMF’s recommendations as sound, attributing the government’s reluctance to restructure these bodies to issues related to debt. According to the source, economic bodies have unrestricted access to loans, with repayment burdens falling on the state budget. However, these loans are not reflected in the official public debt figures.

Government data from 2021 showed that energy sectors — such as the Egyptian General Petroleum Corporation and electricity companies — along with the Suez Canal Authority, transport sectors like the National Authority for Tunnels, and housing sectors, particularly the New Urban Communities Authority, accounted for 84 percent of the loans acquired by economic bodies. These loans represented over 60 percent of the funding sources for their investments during the 2022/23 fiscal year.