The International Monetary Fund (IMF) announced Tuesday that it has reached a staff-level agreement with Egypt, paving the way for the release of around $1.2 billion in crucial financial assistance, Al Jazeera reports.
The deal, which is contingent on approval by the IMF’s Executive Board, comes after Cairo committed to a series of economic reforms aimed at bolstering the country’s struggling finances.
According to the IMF, the agreement was reached after Egyptian authorities outlined a plan to improve macroeconomic stability, including raising the tax-to-revenue ratio by 2 percent of gross domestic product (GDP) over the next two years. Cairo also agreed to accelerate the divestment of state-owned companies, a key demand from the IMF to foster private sector growth.
Beyond fiscal measures, both the IMF and Egypt acknowledged the necessity to expedite reforms aimed at creating a more conducive business environment.
This agreement is part of a broader effort to support the Egyptian economy. In March, Egypt secured an $8 billion loan from the IMF, disbursed in tranches tied to the implementation of economic reforms. This loan expanded on a previous $3 billion, 46-month deal agreed upon in December 2022. As part of the loan terms, Egypt has already devalued its currency significantly and allowed the exchange rate to be determined by market forces.
Egypt has faced considerable economic headwinds, including double-digit inflation, foreign currency shortages, and declining revenues from the Suez Canal. The war in Ukraine and the lingering effects of the COVID-19 pandemic have further exacerbated these challenges. The IMF’s latest agreement underscores the urgent need for Egypt to implement its reform plan effectively and restore financial stability. The $1.2 billion disbursement will provide a much-needed injection of funds to support the country’s economy and ease some of the immediate pressure. The agreement now awaits formal approval by the IMF’s Executive Board before the funds can be released.
