Introduction

In August 2025, the Egyptian Authorityfor Unified Procurement, Medical Supply and the Management of Medical Technology(the “UPA”), in coordination with the Ministry of Finance (the “MoF”) and the Central Bank of Egypt (the “CBE”), announced the implementation of a new financial settlement mechanism. This initiative aims to resolve outstanding debts owed by the UPA to pharmaceutical and medical supply companies operating in Egypt.

This client alert outlines the key terms and implications of the new debt settlement mechanism.

Background

The UPA has accrued substantial financial obligations due to large-scale procurement activities, particularly during and after the COVID-19 pandemic. This situation has been exacerbated by rising import costs, ongoing currency devaluation, and delays in government budgetary allocations. As a result, many suppliers—both domestic and international—have encountered significant payment delays.

To address the financial challenges outlined above, the UPA, in partnership with the MoF and CBE, has introduced a structured mechanism to settle outstanding debts and streamline future payment cycles. The initiative is intended to address these financial challenges, restore supplier confidence, and enhance fiscal discipline across the healthcare procurement system.

Scope of Application

The mechanism draws a clear distinction between outstanding debts and future procurement obligations:

• Future Supplies: For all new supplies delivered on or after 1 July 2025, the UPA has committed to settling payments within a maximum of ninety (90) days from the delivery date.
• Outstanding Debts: For debts accrued up to 30 June 2025, the MoF will issue letters of guarantee covering the full outstanding amounts. These amounts will be repaid over a period of up to three (3) years.

Key Features of the Settlement Mechanism

• The MoF has formally requested the Ministry of Health and Population and its affiliated entities to provide a verified breakdown of all outstanding debts. The statement shall include actual supplies completed before 30 June 2025, after deducting any payments made.
• The MoF will review and categorise the UPA’s outstanding debts based on their nature and available funding sources, in order to facilitate effective payment processing.
• The MoF will issue letters of guarantee for all verified outstanding debts due prior to 1 July 2025.

Conclusion

The introduction of this settlement mechanism marks a pivotal development in Egypt’s centralised healthcare procurement system. By committing to government-backed guarantees for outstanding debts and establishing enforceable payment timelines for future supplies, the authorities are taking concrete steps to restore supplier confidence, reduce systemic financial risk, and ensure the continued availability of medical products.

The contributors to this article are Fadila Abdelaziz, Counsel, Nourhan Beksawy, Associate, and Khaled Omar, Junior Associate.