IMF softens some conditions on Egypt’s $8bn finance package

The International Monetary Fund (IMF) has softened several conditions of its $8bn financial support package to Egypt, including allowing Cairo more time to implement reforms, it said in a review.

Egypt and the IMF agreed on a package in 2022. Still, the IMF postponed disbursements several times after Egypt failed to follow through on conditions, particularly a commitment to a flexible exchange rate. This new review marks a softening of some IMF benchmarks.

The latest review, approved in late July but released only on Monday, was Egypt’s third and followed the expansion of the package size in March. The IMF undertakes reviews twice a year before disbursing funds.

The IMF agreed to delay the publication of annual fiscal account audits by its Central Auditing Organisation until the end of November from the original March, pending an amendment to the law governing the organisation.

It delayed the draft of a plan to recapitalise the central bank, previously scheduled for the end of April, until the end of August to give the authorities more time to estimate the amount of new capital needed and develop a strategy.

It also said Egypt could replace its quarterly retail fuel price increases with a firm commitment to raise prices to “cost recovery levels” by the end of 2025.

The IMF board was initially scheduled to approve the review on July 11 but postponed its meeting until July 29, four days after Egypt raised fuel prices by up to 15 per cent.

Restoring energy prices to their cost recovery levels, including retail fuel prices, by December 2025 is essential to supporting the smooth provision of energy to the population and reducing imbalances in the sector,” the review said.

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