The International Monetary Fund (IMF) has announced a staff-level agreement with Egypt to release $1.2 billion in funds to bolster the nation’s strained finances. The agreement, which remains subject to Executive Board approval, follows Egypt’s commitment to implementing measures aimed at enhancing macroeconomic stability.
Egyptian authorities have pledged to increase the tax-to-revenue ratio by 2% of GDP over the next two years and expedite the privatization of state-owned enterprises, among other reforms.
“A comprehensive reform package is essential for Egypt to rebuild fiscal buffers, reduce debt vulnerabilities, and create room for increased social spending on health, education, and social protection,” said Ivanna Vladkova Hollar, who led the IMF discussions with Egyptian officials.
The agreement also emphasizes the importance of accelerating reforms to improve Egypt’s business environment. Hollar noted that efforts are needed to level the playing field, reduce the state’s economic footprint, and boost private sector confidence to attract foreign investment.
This development builds on Egypt’s March agreement for an $8 billion loan package, linked to economic reforms, which expanded a $3 billion, 46-month arrangement from December 2022. As part of these agreements, Egypt allowed its currency to sharply depreciate and committed to a market-driven exchange rate.
The nation continues to face economic challenges, including double-digit inflation, foreign currency shortages, and reduced revenues from the Suez Canal. Compounding these difficulties are the ongoing impacts of the war in Ukraine and the COVID-19 pandemic.
Source: Foreign Media
