IMF Eases Conditions on Egypt’s USD 8 Billion Financial Package

In a recent review, the International Monetary Fund (IMF) has softened several conditions tied to Egypt's USD 8 billion financial support package, allowing Egypt additional time to implement key economic reforms. This adjustment follows multiple delays in disbursement due to Egypt's previous struggles to meet the original terms, particularly concerning a flexible exchange rate.

Initially agreed upon in 2022, the package encountered setbacks as Egypt failed to meet certain benchmarks, leading to postponed disbursements. However, the IMF's latest review, finalised in late July, introduces more lenient timelines for critical reforms. These include delaying the publication of the Central Auditing Organisation's annual fiscal account audits from the end of March to the end of November, pending legal amendments.

Additionally, the deadline for drafting a plan to recapitalise the Central Bank has been extended from April to the end of August, granting authorities more time to assess capital needs and develop a strategic approach.

Furthermore, the IMF has permitted Egypt to replace its quarterly retail fuel price hikes with a commitment to restore fuel prices to cost recovery levels by the end of 2025. This measure is seen as crucial for stabilising the energy sector and reducing fiscal imbalances.

The IMF Board was initially scheduled to approve the review on July 11th but postponed the decision until July 29th, just days after Egypt raised fuel prices by up to 15%. The review emphasises that aligning energy prices with cost recovery levels by December 2025 is vital for ensuring the sustainable provision of energy and addressing sectoral imbalances.

This revised approach by the IMF underscores the institution's recognition of the challenges faced by Egypt in implementing its ambitious reform agenda, while still maintaining a clear path towards economic stability.