The delayed fourth IMF loan review is still right around the corner: The International Monetary Fund is set to conduct the fourth review of our USD 8 bn loan program by the end of September or in October at the latest, two government sources told Enterprise. The review, which was pushed back from its initial date in September, is set to unlock a USD 1.3 bn tranche.

But the government has its work cut out to meet reform objectives in the run up to meeting: Lifting import restrictions on all goods is a key requirement for the fourth review as it’s essential for a flexible exchange rate that is aligned with market demand, our sources said. The review will also focus on reforms like further subsidy cuts, building monetary reserves, capping tax breaks, and boosting revenues.

Work is already underway to move from subsidies to direct payments: The government is engaged in consultations for a phased withdrawal of subsidies and a gradual transition to direct cash-based assistance, our sources said. The state is reportedly studying a plan to provide EGP 1.25k in cash assistance per family, while reducing the number of goods subsidized under the ration card system. The proposal is one of several studies scheduled for public discussion in the last quarter of the current year before preparations for the FY 2025-2026 budget kick off.

The government is also under to put the state privatization program up a gear: Negotiations are underway to complete the sale of stakes in local companies, one of our sources said, adding that no suitable offers have been made yet. The government is working to raise private sector participation in the economy and attract foreign direct investment by streamlining tax procedures and offering other incentives.

We will still have to wait a while until we see the funds roll in: This latest tranche, as with the others, depends on the IMF Executive Board greenlighting the review. Assuming everything goes to plan, the IMF Executive Board will discuss — and hopefully approve — the review in a December meeting, Al Arabiya reports, citing unnamed sources.

The IMF also released its latest country report on Egypt yesterday, in which it said that the country’s performance for the third review was “satisfactory.” All in all, Egypt met half of the structural benchmarks laid out by the IMF. While the country met the structural benchmarks of a flexible exchange rate, increased tax and budget transparency, and others, Egypt fell short on introducing a “binding requirement” for the timely publishing annual audit and fiscal reports and preparing a recapitalization plan for the central bank, abiding to quarterly fuel increases, and more. The Fund modified some of its benchmarks and gave the country more time to fulfill others.

We’re also one step closer to securing another USD 1.2 bn in climate financing: The government has officially applied for an additional USD 1.2 bn in long-term, low-cost climate financing from the IMF’s Resilience and Sustainability Facility, one of our sources said, adding that the request is likely to be discussed in conjunction with the fourth review.

Remember: The Fund completed its third review of our loan program in late July and the USD 820 mn tranche landed in state coffers just days later. The completion of the third review also allowed Egypt to apply for the additional funds.

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