In a regular press briefing, International Monetary Fund (IMF) spokesperson Julie Kozack said the IMF would combine the fifth and sixth reviews of Egypt's USD8 billion-support programme later this year. Kozack said the goal is to allow the Egyptian authorities more time to achieve the core objectives of their economic reform programme.
IMF staff are working with the Egyptian authorities to finalise key economic policy measures, particularly those related to the state's role in the economy, according to Reuters, quoting Kozack.
She also said it was too early to discuss the amount of any expected disbursements related to the two combined reviews. In recent days, three informed sources told Reuters that the IMF might merge its fifth and sixth reviews of its USD 8 billion support programme to Egypt due to the country's slow progress on structural reforms, potentially delaying the disbursement of a new loan tranche by six months.
The IMF approved the fourth review of the programme last March, enabling the disbursement of USD1.2 billion. The sources said that an IMF team arrived in Egypt last May to begin the fifth review, but it has not yet announced its approval.
The 46-month facility was first approved in March 2024, more than a year after Egypt experienced a severe shortage of foreign currency and inflation peaked at 38 percent in September 2023.
According to Reuters calculations, the IMF has disbursed approximately USD3.5 billion so far under the financing. However, one of the sources said the IMF is dissatisfied with Egypt's slow progress on structural reforms, which are the core of the facility, including divesting state-owned assets. The first source added that Egypt failed to achieve even half of the set structural criteria in the last two reviews. However, financial reforms have progressed relatively smoothly.
Alia Moubayed, chief economist at Jefferies International, (an American multinational independent investment bank and financial services company) said that the most important element in the fifth review of the IMF programme with the Egyptian government relates to the structural reforms of the Egyptian economy, as agreed upon by the two parties. He also said the most important point in this programme is the so-called state divestment from certain sectors of the economy, or the reduction of public investment as a key driver of growth.
He added that the IMF had set a financing target through divestments of $3.6 billion in the fifth review, which Egypt was required to secure by the end of last June, which did not happen. This is one of the main reasons for the delay in approving the fifth review of Egypt's financing programme.
The IMF is dissatisfied with Egypt's slow progress on structural reforms. (Photo: by Adobe)