The International Monetary Fund announced – yesterday, Tuesday – that it had reached an agreement with Egypt that would allow the disbursement of a tranche worth $1.2 billion to Cairo.
Ivana Vladkova Hollar, who headed the International Monetary Fund delegation to negotiate with the Egyptian authorities, said that Egypt continued “to implement key policies that maintain macroeconomic stability despite the ongoing regional tensions that are causing a sharp decline in Suez Canal revenues.”
She added, in a statement, “Employees and authorities agreed on the need to accelerate reforms to improve the business environment and ensure that the private sector becomes the main engine of growth. In this regard, there is a need to… reduce state participation in the economy, and increase private sector confidence to help Egypt attract… Foreign investment and development of its full economic potential.”
She continued: “Continuing implementation of financial consolidation efforts will be necessary to maintain debt sustainability and reduce significant interest costs.”
The Fund said that the two sides reached an agreement at the expert level on the fourth review under the Extended Fund Facility.
More fixes
Vladkova Hollar also noted that the Egyptian authorities’ plans to simplify the tax system were commendable, but “more reforms will be needed to strengthen domestic revenue mobilization efforts.”
She added: “There is a need for a comprehensive reform package to ensure that Egypt rebuilds financial reserves to reduce debt-related vulnerabilities, and create additional space to increase social spending, especially in the areas of health, education, and social protection.”
Obtaining funding in the fourth review still requires the approval of the Fund’s Executive Board.
The discussions, which culminated in the announcement of the agreement, were held from November 6 to 20 in person before being completed virtually.
