EGYPT

The Arab Republic of Egypt is a unitary country with a presidential system of government, whereby the President, elected for a six-year term, holds the executive power. The legislative power has been bicameral since the 2019 constitutional referendum, approved by the House of Representatives in June 2020, which created an upper house (the Senate) of 300 seats. The House of Representatives is made up of 596 members elected for a period of five years by universal suffrage and can be dissolved by the President.

Egypt has a history of centralisation and a hierarchal vertical structure dominating the local administration system. The new Constitution of Egypt, adopted by referendum in January 2014, ended the constitutional transition of the Arab Spring. Since 2015, the central government has prioritised economic reforms, stability and decentralisation. However, the economic and security challenges Egypt is currently facing is delaying the decentralisation process.

The 2014 Constitution commits to empower local administration and to enhance administrative, financial and economic decentralisation in pursuit of social justice and inequalities reduction. It includes the main decentralisation laws of the country, within a time frame of five years (articles 176 and 177): “administrative, financial and economic decentralisation“ and “ensure the fulfilment of the needs of local units in terms of scientific, technical, administrative and financial assistance, and the equitable distribution of facilities, services and resources, and shall bring development levels in these units to a common standard and achieve social justice between these units”. Subsequently, discussions on two draft laws started in 2018 on the improvement of the general planning of state, as well as local administration (draft law of local administration). They aim to provide a greater independence to local governments, by giving them the right to independent budgets, including local taxes and fees. However, in 2020, the parliament temporarily put on hold the debate over their implementation.

Egypt has taken several initiatives to enhance local administrative powers. In 2014, the central government adopted Egypt Vision 2030, a national sustainable strategy, which includes 12 pillars for administrative reform, including the expansion of decentralisation. Additionally, the Egyptian government and the Ministry of Local Development (MLD) launched in 2017 the Upper Egypt Development Programme, funded by a loan from the World Bank and a corresponding contribution from the Public Treasury. Its objectives include (i) enhancing governorate’s ability to manage local development within a framework of good governance, (ii) decentralisation and (iii) increased local revenue streams.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2022)
4 695 villages (قرية)	225 districts or cities (مركز)	27 governorates (محافظة)
21 796 inh.
4 695	225	27	4 947

OVERALL DESCRIPTION: Article 175 of the new Constitution of 2014 simplified the Egyptian structure of subnational governments into three levels: governorates, districts or cities and villages. Regardless of their status, subnational governments are made of two important bodies: (i) an administrative executive council, which includes ministry representatives, and (ii) an elected council. Law 475 of 1977 also divides Egypt into economic regions, which do not have any administrative nor political function.

REGIONAL LEVEL: The governorate is the first level of the subnational government level. It is legally represented and administrated by the governor, who is appointed by the President of the Republic. The governor has the highest executive authority in the governorate and administrative authority over all government personnel except judges in the governorate and is responsible for implementing policies. There are 27 governorates in total. Each governorate has a capital and at least one city. Governors and governorate local councils have extensive powers over local councils, especially regarding legislative and budgetary levels.

INTERMEDIATE LEVEL: Cities or districts are the second level of subnational governments in Egypt and account for a total number of 225. They have both local and executive councils. The executive subordinate officers are appointed by their respective governors.

MUNICIPAL LEVEL: Villages are the smallest level of subnational government and account for a total number of 4 695. Their heads are appointed by their respective governors. They are occasionally further divided into sub-district neighbourhoods (Sheyakha) and residential districts in rural and urban areas. Village councils have control on local services. They are mainly responsible for maintaining security and resolving social and land conflicts, as well as irrigation matters. Their average municipal size by inhabitant is 21 796.

Article 2 of Law N 43/1979, which was amended by Law N 50/1981, indicates that subnational governments are responsible for the creation and provision of all public services within their territories. Their powers include responsibilities delegated by the central government, according to existing laws and regulations, except for national public services, as well as exclusive responsibilities set out by the President of the Republic. Services created and administered by the governorates and other subnational governments are usually presented in a decree.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Intermediate level	Municipal level
1. General public services (administration)	Public policies’ implementationApproval and supervision over all services of general interest	Organisation and supervision of services of general interest in the district or city	Control over the various local services as part of the district’s general policy
2. Public order and safety	Security, ethics and public values	Local securitySocial conflicts	Local securitySocial conflicts
3. Economic affairs / transports	Agriculture and industrial protection efficiencySupervision over productionMonitoring of economic development projectsProposition for the creation of free zones or companies using Arab and foreign capital	-	Development of the village’s economic plan
4. Environment protection	State land and property protectionEnvironment protection	Irrigation issues and land conflicts	Irrigation issues and land conflicts
5. Housing and community amenities	Approval of housing and construction projectsProposition of town and urban planning projects	-	Development of the village’s urban development plan
6. Health	-	-	-
7. Culture & Recreation	-	-	-
8. Education	-	-	Implementation of steps to combat illiteracy
9. Social Welfare	Provide food securityLocal community developmentMonitoring of social development projects	-	Development of the village’s social development plan

Scope of fiscal data: Districts or cities and villages.

SNA 2008

Availability of fiscal data: Low

Quality/reliability of fiscal data: Low

GENERAL INTRODUCTION: The 2014 Constitution and law N 43/1979 provides most of the subnational government legal framework. It encourages strong local revenue, by reducing budgetary and administrative centralisation and extending tax powers to local governments. It also gives the elected councils the right to approve or disapprove the local budget. However, only a few laws related to this matter have been implemented.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% local government
Total expenditure	363	2.9%	11.7%	-
Inc. current expenditure	-	-	-	-
Compensation of employees	290	2.3%	-	80.0%
Intermediate consumption	-	-	-	-
Social expenditure	-	-	-	-
Subsidies and current transfers	-	-	-	-
Financial charges	-	-	-	-
Others	-	-	-	-
Incl. capital expenditure	-	-	-	-
Capital transfers	-	-	-	-
Direct investment (or GFCF)	-	-	-	-

EXPENDITURE: In 2020, local expenditure represented 11.7% of the total public expenditure and 2.9% of GDP. Staff salaries represent most of local government expenditures (over 80%).

DIRECT INVESTMENT: The government is planning to increase investments directed to governorates, based on their needs of development, as well as their disparities. However, these initiatives are still being developed. Data are not available.

ⓘ No detailed data available for this country

Data are not available.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	58	0.5%	2.7%	100.0%
Tax revenue	-	-	-	-
Grants and subsidies	-	-	-	-
Tariffs and fees	-	-	-	-
Income from assets	-	-	-	-
Other revenues	-	-	-	-

OVERALL DESCRIPTION: Subnational government revenues are ruled by the Local Administration law N 43/1979 under Articles 35-38, 51-54 and 69-71. According to Article 178 of the 2014 Constitution, local revenue sources comprise local taxes, local fees, revenues from commercial and industrial businesses owned by the subnational governments, government subsidies/transfers, loans, and other revenues.

The Ministry of Local Development represents the interest of subnational governments and coordinates with ministries and governorates in order to develop local revenue sources. However, the Ministry of Finance collects most of the revenues.

TAX REVENUE: The central government controls the collection and distribution of more than 97% of taxes, resulting in limited local tax revenues. According to law N 43/1979 and its amendments (law 50/1981 and law 145/1988), subnational governments are authorised to retain a share of national taxes collected at the local level, including taxes such as agriculture, property tax, taxes on entertainment houses, moveable property, and industrial and business profits. Local governments have also some own-source revenue (e.g. the motor vehicle tax).

GRANTS AND SUBSIDIES: Data is not available.

OTHER REVENUE: Local governments can collect local fees for the provision of local public services, such as the municipal solid waste management introduced in 2005. Local governments were authorised to increase this fee, as it was not sufficient to cover costs related to the services provided for collecting solid waste.

Furthermore, six governorates had the right to benefit from a specific share in Suez Canal revenues. This was stopped by the Income Tax Law of 2005, although it remains a provision in Law 43/1979.

ⓘ No detailed data available for this country

FISCAL RULES: No information is available.

DEBT: No data is available.

TERRITORIAL MANAGEMENT OF THE CRISIS: In March 2020, Egypt implemented a nationwide lockdown, as well as social distancing measures to manage the pandemic. The central government tasked governors and local governments to enforce, within their jurisdictions, rules and procedures in order to control the spread of the virus (e.g. curfew enforcement, traffic flow control, local health sector monitoring etc.). In addition, directors of health offices both at the governorate and at local levels monitored the number of COVID-19 cases within their respective territories. The President of the Higher Committee (the Prime Minister), assessed and called for adequate and necessary measures to address capacity and supply constraints across governorates.

The country’s policy and institutional responses to the pandemic are managed by the central government, and coordinated via the Higher Committee for Novel Coronavirus Crisis Management. The Higher Committee is the emergency “command centre” coordination body for the pandemic in Egypt, chaired by the Prime Minister and managed by the highest levels of central government. The Committee approves the rules and procedures to control the pandemic, communicated to the country’s governorates and local entities, which are then tasked with implementing and overseeing general adherence within their respective territories. On the other hand, the Ministry of Local Development shares new guidelines to governors, who implement them through local authorities and directorates. The Ministry of Local Development ensures and oversees their effective application.

In addition, the Cabinet’s Economic Group leads Egypt’s economic response to the COVID-19 crisis and is led by the Prime Minister. It ensures coordination between different economic bodies, including the Ministers of Planning and Economic Development, Finance, Trade and Industry, and Public Enterprises, as well as the Central Bank governor and the head of the General Authority for Investment.

Overall, subnational governments have a weak level of influence on national-level advisory committees and decision-making bodies for the COVID-19 response policies, as well as a low degree of autonomy on response within their jurisdictions.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: During the COVID-19 crisis, the government reinforced its engagement in a process of digital transformation of budgeting, tax and customs connections, including at the territorial level. At the national level, it adopted a stimulus package to support health professional, at-risk exporters and productive sectors. Furthermore, it implemented a set of reforms including i) reducing the tax burden on impacted sectors, ii) postponing payments of real estate taxes for a period of three months in the profit of at risk factories, and iii) supressing the real estate tax for six months on tourist and hotel establishments.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Data are not available.

ECONOMIC AND SOCIAL STIMULUS PLANS: Egypt has allocated EGP 100 billion out of the state budget, in order to develop a crisis response. The stimulus plan includes regulatory measures to overcome the health crisis, as well as monetary support measures in social protection, education, information and communication technology, health and vulnerable groups such as irregular workers and women, at the local level.

In addition, the country aims to provide greater power to governors and local administration employees in order to overcome the consequences of the COVID-19 crisis according to the local needs of each governorate. Hence, it plans to expedite the issuance of laws related to decentralisation and to increase investments directed to governorates based on an allocation formula.