Egypt Daily News – The International Monetary Fund has reached an agreement with the Egyptian government, according to which $1.2 billion can be disbursed to Cairo, while the approval of the Fund’s Executive Board remains.
The head of the Fund’s delegation to negotiate with the Egyptian government, Ivanna Vladkova Hollar, said in a statement on Wednesday that Egypt continued “to implement key policies that maintain macroeconomic stability, despite the ongoing regional tensions that are causing a sharp decline in Suez Canal revenues.”
The statement indicated that Egypt agreed to “increase the tax-to-revenue ratio by two percent of GDP over the next two years, with a focus on eliminating exemptions rather than increasing taxes.”
The IMF added that this would “make room for increased social spending to help vulnerable groups.”
Hollar also added in the statement, “Continuing implementation of financial consolidation efforts will be necessary to maintain debt sustainability and reduce significant interest costs.” She also noted that Cairo’s plans to simplify the tax system were “laudable”, but “more reforms will be needed.”
She added, “There is a need for a comprehensive reform package to ensure that Egypt rebuilds financial reserves to reduce debt-related vulnerabilities, and create additional space to increase social spending, especially in the areas of health, education, and social protection.”
The International Monetary Fund mission visited Egypt in November and said it had made significant progress in discussing policies to complete the fourth review under the Extended Fund Facility.
The review, which could provide financing of more than $1.2 billion, is the fourth in the Fund’s 46-month loan program that was approved in 2022 and increased to $8 billion this year, after an economic crisis that witnessed high inflation and a severe shortage of hard currency.
The Fund approved the loan program for the first time in 2022, before increasing its size this year, after high inflation and a severe shortage of hard currency led to a severe economic crisis in Egypt.
Egypt has requested funding within the framework of the Resilience and Sustainability Facility since 2022, as it hopes to obtain up to an additional billion dollars.
Each of the first three reviews allowed the Egyptian authorities to obtain $820 million, and the third review was completed at the end of July.
