International Monetary Fund (IMF) spokesperson Julie Kozak confirmed Egypt’s progress in its macroeconomic program while recommending deeper reforms including reduced state ownership. During her regular press briefing, Kozak explained that the Fund will combine Egypt’s fifth and sixth reviews of its $8 billion support program in autumn 2024, providing additional time for authorities to complete reforms aligned with economic objectives.
IMF experts are currently collaborating with Egyptian authorities to finalize key economic policy measures, particularly concerning the state’s role in the economy, according to Reuters reports. Kozak noted it remains premature to discuss specific amounts related to the combined reviews.
Three informed sources told Reuters last Tuesday that the IMF might merge its fifth and sixth reviews for Egypt’s $8 billion support program due to the country’s gradual implementation of structural reforms, potentially delaying new loan disbursements by six months.
The Fund approved the program’s fourth review in March, releasing $1.2 billion. Although an IMF team arrived in Egypt in May to initiate the fifth review, no approval has been announced yet. The 46-month facility was initially approved in March 2024 following over a year of severe foreign currency shortages and inflation peaking at 38% in September 2023.
According to Reuters calculations, the Fund has disbursed approximately $3.5 billion so far. However, one source indicated the IMF remains unsatisfied with Egypt’s slow progress on structural reforms – particularly state asset divestiture – which form the program’s core. The source noted Egypt failed to meet half the structural criteria in the last two reviews, though financial reforms have progressed relatively smoothly.
Alia Moubayed, Chief Economist at Jefferies International, told “Al Arabiya Business” that structural economic reforms – specifically state withdrawal from certain economic sectors or reduced public investment as a growth driver – represent the most critical element in the fifth IMF program review with Egypt. She explained that the Fund set a target of securing $3.6 billion through privatization efforts before June 2025 in the fifth review, a goal that remains unmet and constitutes a primary reason for delayed approval of Egypt’s fifth IMF financing review.