The Washington, DC-based lender says Cairo agreed to raise the tax-to-income ratio and accelerate the divestment of state-owned firms.
The International Monetary Fund (IMF) has announced that it has reached an agreement with Egypt to unlock about $1.2 billion in funds to support the country's troubled finances.
The Washington-based lender said on Tuesday it had reached “staff-level agreement”, which is subject to approval by the Executive Board, as Cairo outlined steps to improve macroeconomic stability.
Egyptian authorities agreed to raise the tax-to-income ratio by 2 percent of gross domestic product (GDP) over the next two years and speed up the sale of state-owned companies, among other steps, the lender said.
“A comprehensive package of reforms is needed to ensure that Egypt rebuilds fiscal buffers to reduce debt vulnerabilities and generate additional space to increase social spending, especially in health, education and social protection,” said Ivanna Vladkova Hollar, of which led the IMF's discussions with the Egyptian. the authorities.
Both sides also agreed on the need to accelerate reforms to improve the business environment, Holar said.
“In this regard, more decisive efforts are needed to level the playing field, reduce the state's footprint in the economy and increase the confidence of the private sector to help Egypt attract foreign investment and develop its full economic potential.” ,” she said.
Egypt in March reached an agreement to receive an $8 billion loan from the IMF in installments subject to undertaking economic reforms, expanding to a 46-month $3 billion agreement reached in December 2022.
As part of the terms of the loan, Cairo agreed to let its currency depreciate significantly and allow the exchange rate to be determined by market forces.
Egypt has faced double-digit inflation and foreign currency shortages amid economic challenges, including a collapse in revenue from the Suez Canal, the war in Ukraine and the fallout from the COVID-19 pandemic.
