The Institute of National Planning has established a Modelling Unit (MUINP) since 2020. MUINP can act as an advisory entity to provide different stakeholders/ policy makers with technical support, by using different modeling methodologies for policy analysis and forecasting. MUINP aims to apply various evidence-based methodologies, including mainly Macro -econometric models, CGE (Computable General Equilibrium) economy wide modeling, as well as System Dynamics. The main goal of MUINP is to provide the policy decision makers, at the Ministry of Planning, or other relevant Ministries with evidence-based policy alternatives.
During the past few years, the Egyptian economy has embarked on implementing an ambitious agenda for economic structural reforms, to achieve higher GDP growth rates and enhance sustainable development goals. However, Egypt is also facing many challenges, that might hamper the steady implementation of the intended reforms. There are domestic and external challenges. Domestic challenges include for example, limited water resources and climate change, as well as other domestic constraints etc… External challenges refer to external shocks or crises such as Covid-19 pandemic, which is considered as an unprecedented health crisis with immense negative economic repercussions, leading to a worldwide economic downturn. Also recently, the Ukraine Russian war, has led to multiple economic disruptions on the global level, especially for the countries which were heavily relying on importing food products, namely wheat and cooking oil. This crisis has generated inflationary pressures worldwide. In Egypt, food prices have witnessed a notable hike during the last month, increasing by more than 30%, according to CAPMAS data.
But more detailed analysis regarding the possible dynamic repercussions of such economic policies and external shocks is required to inform governments and international partners. Moreover, longer-term structures need deeper investigation and analysis to enable Egypt to be better prepared for future shocks and challenges.
Hence, there is a need to conduct policy analysis and forecasting to support the Government of Egypt in effectively assessing economic policies and external shocks in a structured and evidence-based way. Rigorous policy analysis requires utilizing advanced methodological tools in order to provide evidence-based solutions. These tools might include using macro-econometric modelling techniques or economy wide modelling such as CGE models, that help in designing policy scenarios and simulations. In addition, System Dynamics approach will be applied.
MUINP aims to realize the following main goals:
- Strengthening the modelling skills of the MUINP Staff, by attending training courses on macro econometric, CGE modelling and Systems dynamics.
- Building a Macro-econometric model that helps in forecasting different economic variables.
- Building other complementary models to study specific important issues that may occur, for example in the field of monetary and fiscal policies, or other issues or problems that may arise.
- Forecasting the economic variables and estimating elasticities.
- Using CGE modelling for policy analysis and running simulations.
- Helping in drafting concise policy notes that are related to economic policy alternatives.
- Applying System Dynamics Approach.
- Organizing joint workshops to discuss the relevant research results, in collaboration with potential academic and international stakeholders.
MUNIP Team and Structure of the Unit
A team of diligent researchers (10 lecturers, 12 teaching assistants and 5 research assistants) who are affiliated to the Institute of National Planning have already joined the MUINP, aiming to form a Policy modelling team. To accomplish the above-mentioned objectives, the MUINP will be structured in three major departments: Department 1 (Macro-econometric Team), Department 2 (SAM-CGE), and Department 3 (Systems Dynamics).
In general, and for the 3 departments, external consultants and experts affiliated to other research or academic institutions might also join MUINP. They will be carefully selected, according to specific criteria, such as highly advanced modelling skills and a strong background in the relevant areas and topics. Furthermore, it is essential to work closely in partnership with renowned relevant institutions, such as Cairo University, Faculty of Economics and Political Science, ECES, ERF, Ministry of Planning, Ministry of Finance, Central Bank of Egypt and IDSC. Other international and regional organizations might include IMF, Arab Planning Institute, Arab Monetary Fund, ILO, IFPRI, and ESCWA. In this regard, MUINP is seeking additional funding resources from international partners to support the establishment of the unit and capacity building of its staff, for the short and medium terms.
Structure of the MUINP