The International Monetary Fund (IMF) announced on Wednesday that it has reached a staff-level agreement with Egypt for the fourth review under its Extended Fund Facility (EFF) arrangement. If approved, this could unlock a $1.2 billion disbursement as part of the program.
Egypt, facing severe economic challenges including high inflation and a foreign currency shortage, entered into the $8 billion, 46-month EFF agreement in March. The country’s financial struggles have been exacerbated by a significant decline in Suez Canal revenues due to regional tensions over the past year.
As part of the agreement, Egypt has committed to increasing its tax-to-GDP ratio by 2% over the next two years. The focus will be on eliminating tax exemptions rather than raising tax rates, a move aimed at creating fiscal space for increased social spending to support vulnerable populations.
“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the IMF stated.
Additionally, Egypt has pledged to take stronger measures to position the private sector as the primary driver of economic growth and maintain its commitment to a flexible exchange rate.
The staff-level agreement remains subject to approval by the IMF’s executive board before the disbursement can proceed.
