Ahmed Kamel – Egypt Daily News
The International Monetary Fund (IMF) has made the release of $274 million in funding to Egypt contingent on the country implementing two key reforms: accelerating the privatization of state-owned enterprises and cutting fuel subsidies, according to a source familiar with the matter who spoke on condition of anonymity.
The funding is part of the IMF’s Resilience and Sustainability Facility (RSF), which aims to support countries in addressing long-term structural challenges such as climate change and economic resilience.
IMF spokesperson Julie Kozack confirmed on Friday that disbursement of the next tranche will not proceed until two unspecified reform benchmarks are met. The source later identified those benchmarks as critical steps in Egypt’s privatization program and a review of fuel pricing mechanisms set to be evaluated by Egypt’s Fuel Pricing Committee next month.
Each reform milestone is tied to a disbursement of approximately $137 million, with both to be evaluated during the IMF’s first review of the RSF program this autumn. That review will coincide with the fifth and sixth reviews under Egypt’s Extended Fund Facility (EFF), which have been merged due to delays.
Privatization Push
Egypt is targeting $3 billion in revenue from the privatization of state assets during the current fiscal year, ending in June 2026, according to a government document. The plan includes divesting stakes in state-owned companies and inviting private sector participation in infrastructure projects.
Despite the ambitious targets, progress has been sluggish. A long-anticipated sale of Banque du Caire to Emirates NBD collapsed earlier this year over valuation disagreements. Additionally, Egypt has not yet published the updated version of its privatization roadmap after the portfolio was reassigned to new Investment Minister Hassan El-Khatib.
The government has, however, taken steps to prepare key military-owned enterprises for sale. Two companies Wataniya Petroleum and Safi (bottled water) are expected to be offered to strategic investors or listed on the Egyptian Exchange. The Sovereign Fund of Egypt has partnered with investment banks EFG Hermes and CI Capital to market five such companies in the next two years.
In parallel, the Cabinet’s Information Council is developing a new composite index to monitor the state’s role in the economy, according to Planning Minister Rania Al-Mashat.
Fuel Subsidy Reform
On the subsidy front, the Egyptian government plans to reduce fuel subsidy allocations to EGP 75 billion ($1.53 billion) in the draft budget for fiscal year 2025–2026. Prime Minister Mostafa Madbouly has previously stated that fuel subsidies will be gradually phased out by the end of 2025, though partial support will remain for essential products such as diesel and cooking gas cylinders.
The IMF has consistently urged Egypt to adopt more targeted and fiscally sustainable subsidy systems. Energy subsidies have long been a significant burden on the Egyptian budget, with fluctuations in global oil prices adding pressure on the country’s foreign currency reserves.
Program Expansion and Future Outlook
Egypt reached a revised agreement with the IMF in March 2024 to expand its financial support program from $3 billion to $8 billion, helping the government weather a severe economic crisis that has persisted since early 2022. Following the fourth EFF review, Egypt received $1.2 billion in March, bringing the total disbursed under the facility to $3.2 billion.
While the government has indicated it does not intend to negotiate a new IMF program once the current one expires in October 2026, it is preparing to launch a long-term national development strategy dubbed the “National Economic Narrative” that outlines Egypt’s vision through 2030 and 2050. Details of the strategy are expected to be released for public consultation in the coming weeks, with final approval anticipated by year-end.
