The agreement, initially approved in December 2022, has seen some delays. While the fourth review was technically completed in March, its publication remains pending.
The fifth review is expected to conclude before the end of the current fiscal year (FY 2024/2025, unlocking a $1.2 billion disbursement.
In May, the IMF announced the conclusion of its mission's visit to Egypt to discuss the fifth review. Days earlier, during a press briefing, the fund reaffirmed its support for Egypt’s efforts to enhance economic resilience and promote sustainable, private sector-led growth.
As the fiscal year draws to a close, government officials are accelerating efforts to address outstanding technical and structural issues crucial for unlocking future disbursements.
These efforts come amid continued global economic headwinds and inflationary pressures that have impacted key foreign currency inflows.
Combined report to be released
A source familiar with the discussions told Ahram Online that the IMF is expected to issue a combined report covering the fourth and fifth reviews upon completion of current discussions, which are anticipated to conclude before the end of June.
"The IMF remains committed to supporting Egypt through to the end of the programme in September 2026," according to the source.
"However, Egypt has requested a short extension to early 2027, citing the economic repercussions of the Gaza conflict and its impact on critical revenues such as those from the Suez Canal," the source added.
Prime Minister Mostafa Madbouly recently reiterated the government's fiscal targets, including reducing the debt-to-GDP ratio to 85 percent by the end of the current year and improving it to 80 percent by FY2026/27.
These goals are supported by ongoing reforms such as expanding the tax base and streamlining public spending.
While these targets are more ambitious than originally outlined in the IMF agreement, the fund has acknowledged Egypt's external challenges. It is open to reassessing its projections during the current review cycle.
Progress in privatization
Progress in privatization remains a focal point. The IMF and private sector actors have emphasized the need to advance Egypt’s state ownership policy.
Although plans were announced to offer shares in companies like Wataniya Petroleum and Safi, implementation has taken longer than expected.
Recently, the management of several military-affiliated hotels was transferred to UAE-based Gwan Hotels and Resorts — a step that, though notable, has raised questions about transparency and alignment with IMF benchmarks.
"The IMF views the pace and clarity of the privatization process as critical benchmarks for the programme," the source noted.
To support these efforts, the Sovereign Fund of Egypt and the National Service Projects Organization have signed agreements with international consultancies to facilitate future listings.
However, releasing a detailed database of state assets, as committed under the IMF programme, is still pending.
There is growing anticipation of tangible progress on structural reforms, which can boost investor confidence and encourage private sector participation.
"The programme's success depends not only on policies but also on delivering measurable outcomes that enhance the business climate and promote long-term stability," the source explained.
Complex economic landscape
Jack Kennedy, head of MENA Country Risk at S&P Global Market Intelligence, told Ahram Online that fiscal reform remains a challenge, given the complex global, regional, and local economic landscape.
He explained that tax revenues are expected to increase through improved collection mechanisms without introducing new taxes.
“The proposed increase in subsidy allocations—especially for food—suggests that a major transition toward targeted cash support may not occur in the upcoming fiscal year,” Kennedy said.
He further highlighted Egypt’s efforts to comply with IMF recommendations on fuel subsidy reform, including the recent price adjustment in April and a possible follow-up in October.
Meanwhile, Racha Helwa, director of the empowerME Initiative at the Atlantic Council, noted that while Egypt’s fourth review was completed earlier this year, its publication was deferred at Egypt’s request. This and the pending fifth review have raised questions about programme execution timelines.
“The current delay highlights a broader challenge: reconciling Egypt’s structural reform agenda with evolving political and economic constraints. While the IMF has emphasized concluding the programme as scheduled in September 2026, Egypt has requested an extension through 2027, citing regional instability, softer Suez Canal revenues, and tightening external financing conditions," Helwa stated.
"The IMF has thus far reaffirmed the original timeline, stressing the importance of adhering to debt sustainability targets and advancing reform, particularly in fiscal management and privatization,” she told Ahram Online.
Key issues and areas of concern
As per Helwa, one factor contributing to the delay is the Ras El-Hekma investment agreement, announced with the United Arab Emirates in early 2024.
Valued at $35 billion, the agreement was positioned as a major step toward alleviating foreign currency shortages.
However, details about the deal’s structure and execution remain limited.
Uncertainty around fund inflows, the majority of which is reportedly linked to UAE-held deposits and land valuations, has posed challenges for IMF assessments and raised broader concerns regarding transparency and fiscal planning.
At the same time, progress on the privatization agenda has been uneven, according to Helwa.
“Despite prior commitments to divest stakes in select military-affiliated enterprises, delays in implementation and limited public disclosure have tempered investor enthusiasm. The IMF has closely tied programme benchmarks to the State Ownership Policy, calling for updated databases, regular reporting, and concrete asset transfers. Advancing on these fronts is seen as essential to reinforce reform credibility,” she explained.
According to the expert, further complexity stems from a divergence in fiscal projections.
In this respect, Helwa clarified that the Egyptian government has announced targets to reduce public debt to 85 percent of GDP by the end of FY2024/25 and to 80 percent by mid-2027.
However, IMF baseline estimates anticipate a slower decline, from 92.9 percent by end-2024 to 73.9 percent by 2027. This gap reflects ongoing pressures from debt servicing costs and underscores the need for sustained fiscal discipline.
Continuous IMF engagement: Policy priorities for Egypt
As Egypt prepares for the next phase of engagement with the IMF, according to Helwa, four priority areas have emerged as critical for programme continuity and economic stabilization:
1. Sustained Fiscal Consolidation
Maintaining a primary surplus of 3.5-4 percent of GDP is central to the debt sustainability framework.
This will require continued expenditure rationalization, particularly in reducing untargeted subsidies, while protecting health, education, and social welfare investments.
On the revenue side, improving tax administration, broadening the tax base, and digitalizing customs operations will help increase revenues without raising overall tax rates.
2. Transparency and Stability in Foreign Exchange Policy
The March 2024 decision to float the Egyptian pound marked a key step toward restoring FX market stability.
Going forward, a unified and transparent exchange rate regime, free from informal controls, will be critical. This includes ensuring all entities access FX through the interbank system.
Additionally, clearer communication around large financial agreements, including Ras El Hekma, will support investor confidence and improve fiscal planning.
3. Revitalizing the Privatization Agenda
Timely implementation of the State Ownership Policy will be an important signal of reform momentum.
Moving forward with listings or sales of entities such as Wataniyyah and Safi and improving governance, reporting, and competitive processes will help restore market trust.
Rationalizing state-owned enterprise (SOE) incentives and integrating them into transparent fiscal frameworks will further level the playing field.
4. Enhancing Debt Management and Disclosure
Egypt’s debt strategy should focus on extending maturities, lowering borrowing costs, and reducing reliance on short-term external debt.
Enhancing transparency, including publishing data on contingent liabilities and SOE-related debt, will aid investor assessments.
Shifting toward concessional financing and long-term domestic instruments can help mitigate foreign currency and refinancing risks.
Looking ahead
“The success of Egypt’s reform programme rests not only on external support, but on the government’s ability to demonstrate progress on key reform milestones. Meeting current IMF benchmarks, publishing overdue reports, accelerating privatization, and enhancing FX market operations will be critical to unlocking future disbursements and reducing macroeconomic vulnerabilities,” Helwa stressed.
The coming six to 12 months will be a defining period. Credible actions, improved policy transparency, and sustained stakeholder engagement can help Egypt consolidate economic stability and lay the groundwork for inclusive, private sector-led growth.
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