Egypt is improving, according to the IMF, but it still needs to expand its revenue base

The International Monetary Fund stated on Tuesday following a review mission to Egypt that although the country has made strides toward macroeconomic stability and has been simplifying tax and customs procedures, it still needs to expand its tax base.

As part of its fifth review of a $8 billion financial support agreement agreed in March 2024, an IMF delegation traveled to Egypt from May 6 to May 18.

The team was led by Vladkova Hollar, the IMF Mission Chief for Egypt, who stated, “Egypt has made substantial progress toward macroeconomic stability.”

“Growth is expected to continue strengthening, and we upgraded our forecast for FY24/25 to 3.8%, in light of the stronger-than-expected outturn in the first half of the year,” Hollar stated in a press release.

Last month, a Reuters survey of 17 economists predicted 3.8% growth in the fiscal year 2024–2025, which started in July.

Last week, Egypt’s central bank reported that the economy expanded by 4.3% during the October-December quarter and was expected to rise by 5.0% for the January-March period.

According to the IMF statement, improved supervision and management of major public sector infrastructure projects was assisting in reducing demand pressure.

It further stated that the government was trying to modernize and simplify the customs and tax processes.

“The effects of these reforms are beginning to show. It further stated that domestic revenue mobilization must continue in tandem with these initiatives, namely through expanding the tax base and simplifying tax exclusions.

In March, the IMF authorized its fourth evaluation of the program, allowing $1.2 billion to be disbursed.