Cairo [Egypt], December 25 : The International Monetary Fund (IMF) has announced an agreement with Egypt to unlock approximately USD 1.2 billion in funding to support the country's struggling finances, Al Jazeera reported on Wednesday.
The Washington-based institution confirmed on Tuesday that a "staff-level agreement" had been reached, which now awaits approval by the IMF's Executive Board, it said.
As part of the agreement, Egyptian authorities committed to raising the tax-to-revenue ratio by 2 per cent of GDP over the next two years and expediting the sale of state-owned companies, among other reforms, as reported by Al Jazeera.
Ivanna Vladkova Hollar, who led the IMF's discussions, emphasised the need for a comprehensive reform package to restore fiscal stability, reduce debt risks, and create more room for social spending in areas like health, education, and social protection.
"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," said Hollar, as quoted by Al Jazeera.
Additionally, both parties agreed to accelerate reforms aimed at enhancing Egypt's business environment. This includes reducing state involvement in the economy and boosting private sector confidence to attract foreign investment and realise Egypt's economic potential.
"In this regard, more decisive efforts are needed to level the playing field, reduce the state footprint in the economy, and increase private sector confidence to help Egypt attract foreign investment and develop its full economic potential," she said as quoted by Al Jazeera.
Earlier in March, Egypt had reached an agreement for a USD 8 billion loan from the IMF, contingent upon implementing further economic reforms. This deal builds upon a USD 3 billion loan agreement signed in December 2022. As part of the conditions, Egypt agreed to allow its currency to depreciate and let market forces determine the exchange rate.
Egypt has been facing significant economic challenges, including double-digit inflation, a shortage of foreign currency, and reduced revenue from the Suez Canal. Additionally, the country is dealing with the economic consequences of the war in Ukraine and the lingering impacts of the COVID-19 pandemic.