IMF may delay $1.2 billion payment to Egypt over slow structural reforms

A $1.2 billion disbursement from the International Monetary Fund (IMF) to Egypt could be delayed by up to six months as the Fund considers merging its fifth and sixth reviews of Egypt’s $8 billion loan program, according to Reuters.

People familiar with the talks said the delay stems from concerns that Egypt’s structural reforms are lagging behind expectations.

The IMF last approved a review of Egypt’s program in March, triggering a $1.2 billion payout. Its Egypt mission arrived in Cairo in May to start the fifth review but has yet to give its approval.

In March 2024, the IMF increased Egypt’s loan package from $3 billion to $8 billion to help the country manage rising inflation and the economic fallout from the wars in Ukraine and Gaza.

The program requires Egypt to carry out both financial and structural reforms to strengthen its economy. While Egypt has made progress on financial measures, it has fallen short on structural goals, such as selling state-owned assets. In the last two reviews, Egypt failed to meet half of its structural targets, sources said.

If the fifth review is delayed, the next tranche could be held up until after the summer, with the next IMF board meeting unlikely before December.

The IMF has not yet released its staff report from the fourth review. According to one source, Egypt requested a delay to finalize new measures aimed at broadening the tax base.

On Sunday, Egypt’s parliament approved expanding the value-added tax, raising taxes on construction, contracting, crude oil, cigarettes, and alcohol. This step could help unlock the release of the IMF’s staff report, the source added.