IMF Begins Final Review for Egypt That Could Unlock $2.3 Billion

An IMF mission has arrived in Cairo to begin the eighth and final review of Egypt's $8 billion program, as well as the final review under the Resilience and Sustainability Facility, according to a government official. The official stated that the mission arrived weeks ahead of the second half of November, which was originally expected.

Completing both reviews will lead to the release of about $2.3 billion, including $1.5 billion under the Extended Fund Facility and $800 million under the Resilience and Sustainability Facility. Mohamed Maait, Executive Director at the IMF representing the Arab group, expects the talks to take about two weeks and for both reviews to pass because the program has met its targets.

Discussions cover the private sector's role in the economy, state asset sales, exchange rate flexibility, and the alignment of monetary policy with program objectives. The Fund is seeking about $1.5 billion from asset sale proceeds before the program ends, while the remaining amount stood at around $1 billion last week. Officials are counting on the offering of Banque du Caire, which could raise about $680 million for Banque Misr.

Energy subsidies appear to be the most challenging file, as the government absorbed higher costs instead of passing new increases on to consumers, skipping two fuel price hikes it had committed to in the seventh review, while freezing prices until the end of December. The tax file remains on the table, including a delayed 4% withholding tax on local free zone companies' sales. The program ends on December 15, alongside the national economic transformation plan 2027-2030 scheduled for completion by the end of December.

What do these terms mean?

Extended Fund Facility (EFF): A long-term loan granted by the IMF to a country facing balance of payments problems, in exchange for implementing an agreed-upon reform program.

Resilience and Sustainability Facility (RSF): Additional funding from the Fund supporting reforms related to climate, sustainability, and economic resilience.

Withholding tax: A tax deducted by the payer from the amount prior to transfer, allowing the state to collect it in advance rather than waiting for the income earner's tax return.