Egypt has secured staff-level approval from the International Monetary Fund (IMF) for the fourth review of its $8 billion Extended Fund Facility (EFF) arrangement, paving the way for a potential $1.2 billion disbursement.
The IMF’s announcement on Wednesday comes as Egypt battles soaring inflation and a persistent foreign currency crunch. The economic strain has been exacerbated by a sharp drop in Suez Canal revenues over the past year, attributed to heightened regional tensions.
Under the terms of the agreement, Egypt committed to increasing its tax-to-revenue ratio by 2% of GDP over two years, primarily by closing tax exemptions rather than introducing new taxes. The IMF emphasized that this measure aims to free up resources for expanding social welfare programs targeting vulnerable communities.
“Efforts to streamline and simplify the tax system are commendable, but further reforms are essential to boost domestic revenue mobilization,” the IMF stated.
The agreement also underscores the need for Egypt to solidify the private sector’s role as a key driver of economic growth and maintain its pledge to a flexible exchange rate.
While the staff-level agreement marks a significant milestone, it awaits final approval from the IMF’s executive board.
