IMF reaches $1.2 billion funding deal with Egypt

The International Monetary Fund (IMF) announced Tuesday that it has reached a staff-level agreement with Egyptian authorities, granting the country access to approximately $1.2 billion in funding. The arrangement remains contingent on executive board approval.

Ivanna Vladkova Hollar, head of the IMF mission, commended Egypt for maintaining macroeconomic stability despite regional tensions that have significantly reduced revenue from the Suez Canal. “The Egyptian authorities have continued to implement key policies to preserve macroeconomic stability, despite ongoing regional tensions that are causing a sharp decline in Suez Canal receipts,” she said in a statement.

The funding agreement is part of the fourth review under Egypt’s Extended Fund Facility arrangement. Vladkova Hollar underscored the importance of continued fiscal reforms to manage debt sustainability and reduce the nation’s significant interest costs and domestic financing needs.

“Continued implementation of fiscal consolidation efforts will be necessary to preserve debt sustainability, and reduce large interest costs and gross domestic financing requirements,” she noted.

Egypt has made strides in simplifying its tax system, according to the IMF, though additional reforms are necessary to bolster domestic revenue collection. Vladkova Hollar emphasized the need for a broader reform agenda to strengthen fiscal resilience and enhance social spending in critical sectors.

“A comprehensive reform package is needed to ensure that Egypt rebuilds fiscal buffers to reduce debt vulnerabilities, and generates additional space to increase social spending, especially in health, education and social protection,” she added.

Negotiations leading to the agreement were conducted in person from November 6-20, with virtual discussions following that period.