Egypt’s IMF program review approval could be delayed, according to sources

Three people with knowledge of the talks said Tuesday that the IMF may combine its fifth and sixth reviews of Egypt’s $8 billion bailout program due to the country’s poor progress on structural reforms, potentially postponing a fresh payout by six months.

In March, the International Monetary Fund authorized the program’s fourth review, allowing for a $1.2 billion payout. According to the sources, an IMF team arrived in Egypt in May to start the fifth review, but they have not yet indicated their approval.

After over a year of acute foreign exchange shortages and inflation that peaked at 38% in September 2023, the 46-month facility was initially signed in March 2024.

Based on figures by Reuters, the IMF has disbursed approximately $3.5 billion under the fund thus far.

According to one of the individuals, it has been unhappy with Egypt’s sluggish progress on the structural reforms that form the facility’s focal point, such as the sale of public assets. According to the first source, Egypt’s past two evaluations fell short of half of its structural benchmarks.

The process of financial reform has gone rather smoothly.

A spokesman for the finance ministry was not immediately available for comment. A request for comment was not immediately answered by the central bank.

The program would be put on hold until after the summer if the fifth review were postponed, and the next board meeting would probably take place in December at the latest.

A staff report from the fourth review has not yet been released by the IMF. According to the first source, Egypt requested a postponement so that it could announce the specifics of the plans to expand the tax base.

The expansion of the value-added tax, which would result in increased taxes on crude oil, cigarettes, alcohol, and construction and contracting services, was authorized by parliament on Sunday.

According to the first source, that might lead to the publication of the IMF staff study.