Banking Supervision (June 24-28, July 29-August 2, November 5-8)
In response to the Central Bank of Egypt (CBE) request, METAC provided capacity development on the implementation of the International Financial Reporting Standard (IFRS) 9 of the International Accounting Standards Board. IFRS 9 defines the accounting approach for recording the impairment of financial assets, based on expected credit losses instead of incurred losses. The mission introduced to the CBE how supervisory guidance could be improved on loan-loss provisioning in line with the requirements of the IFRS 9. It also discussed with the CBE, two international external audit firms, and one large bank in Egypt their preparedness to implement this standard and the challenges they face, particularly with respect to loan classification, measurement, and provisioning, and provided several recommendations.
In response to the CBE’s request, METAC provided training to the CBE supervisors on Market Risk. The objective of this training was to build the CBE capacity to upgrade and update the capital adequacy regulation and better capture and measure the risks of financial instruments in the trading book in line with the Standard on Market Risk issued by Basel Committee on Banking Supervision in January 2016.
To assist the CBE in implementing Basel III requirements, METAC delivered a training to its supervisors on the “Revised Standardized Approach for Credit Risk” published by Basel Committee on Banking Supervision in December 2017. The training included explanation and discussion of this approach and the necessity to exercise due diligence by supervisors for individual exposures in addition to the recognition of external ratings. The training also presented in an excel sheet analysis of the impact of the new credit risk measurement framework on banks’ profit, and accordingly on their capital adequacy ratio.
Public Financial Management (September 2 – 12)
METAC provided two technical assistance missions that were part of the medium-term support to the Egyptian authorities on fiscal risk identification, management, and disclosure. Over the last two years, they have initiated actions to strengthen their fiscal risk management practices, including (i) publication of a Fiscal Risk Statement annexed to the Budget Statement, (ii) development of an in-year fiscal risk monitoring exercise, (iii) streamlining of the guarantee policy, and (iv) preparation of hedging against movements in imported oil prices. In this context, the visit supported the development of capacities and identified avenues for progress, including through a special focus on State Owned Enterprises (SOEs). It included a workshop on (i) standards, good practices, and international experiences related to fiscal risk identification and disclosure, (ii) tools for monitoring fiscal risks, including the ones resulting from SOEs, and (iii) their integration within the budget cycle. It gathered representatives of all key units involved in fiscal risk management within the Ministry of Finance.
Revenue Administration (May 6-17, September 30-October 2, December 9-20, March 26-30, April 14-25)
METAC continued to support the Egyptian Tax Authority (ETA) in developing and implementing improved filing and payment compliance management procedures, based on international good practice. The expert also discussed with the authorities the design of a Program Management Office and governance framework to support further tax administration reforms. He also assisted the ETA in defining the necessary preparations for the national rollout of the new procedures, including finalization of the detailed and time-bound implementation action plan.
A joint FAD-METAC mission to Egypt discussed with the Ministry of Finance and Revenue Agencies the adoption of a Medium-Term Revenue Strategy (MTRS) . The mission provided guidance on the core elements and steps needed for an effective formulation and implementation of an MTRS, presented other country examples and advised on the development of a time-bound work plan for the formulation and adoption of the MTRS.
METAC provided further technical assistance to support the ETA in developing and implementing improved filing and payment compliance management procedures based on international good practice. After completion of the pilot phase designed with METAC support, the ETA is currently half way through a national roll-out; the new procedures have been introduced into 188 offices with encouraging early results. The mission assisted the ETA to monitor and analyze the results of the use of improved filing and payment compliance management procedures on a regular basis and advised on how to use the information gathered trough monitoring and analyses, to adjust the procedures. Additionally, it supported the authorities in building a sustainable project management and analytical capability, mitigation of project risks and developing outcome-based performance measures.
METAC’s revenue administration advisor joined an IMF FAD mission to Egypt to advise on the revenue administration component of Egypt’s MTRS. The mission held discussions with senior officials of the Ministry of Finance and key operational staff of the ETA, to identify strategic issues in designing and implementing the MTRS. Discussions were also held with private sector stakeholders on the challenges in revenue administration reforms.
In another activity, METAC provided the ETA with support in improving compliance risk management—part of an ongoing project in strengthening revenue administration and governance arrangements. The activity included: providing practical workshops on the compliance risk management process—identifying risk, assessing and prioritizing risk, and developing a risk register and treatment strategies—; reviewing ETA’s current risk management structure and governance; and providing guidance on how to set up a unit and steering committee dedicated to compliance risk management.
Statistics (December 9-20 and January 13-22, 2019)
METAC assisted the Ministry of Planning, Monitoring and Administrative Reform, and the Central Agency for Public Mobilization and Statistics, in improving the measures of gross fixed capital formation (GFCF) in the national accounts and the supply and use tables (SUT). The mission reviewed methods used to estimate GFCF in the observed and non-observed economy and identified data gaps and sources to fill them. The mission also made recommendations to address some of the problems that contribute to different GDP estimates between the annual national accounts and the supply and use tables.
METAC assisted the CAPMS in improving the CPI and the producer price index (PPI). A METAC experts assessed and updated work plans established in previous missions, noting that significant progress had been made in the last year. They also trained officials on selecting, weighting, and aggregating transactions for PPIs, on methods for calculating PPIs for the construction sector, and on imputation for temporarily missing items in CPI and PPI.