Egypt’s seventh review under the IMF’s Extended Fund Facility (EFF) is now just 78 days away, with the Fund pencilling in 15 June for the country’s next review, according to the Fund’s latest country report (pdf). But to get there, the Fund is highlighting significant progress on divestment — alongside other measures — as a key condition to unlock the remaining USD 3.3 bn from the remaining two tranches from the EFF, in addition to an additional inflow from the Resilience and Sustainability Facility.

To give it some time to meet the Fund’s criteria, Egypt is asking for the end date of the entire program to be pushed from October to December, bringing the arrangement’s total length to 48 months, in addition to a corresponding extension for the RSF.

Why this matters: For the Fund, divestment is seen as one of the primary indicators for it to assess the country’s push to promote private sector activity and reduce the state’s footprint in the economy and a key way to pay off the national debt. With the IMF noting that “no material divestment has occurred over the last 24 months, while new military entities were created” and its program with the country nearing its end, expect to see the Fund double down on its divestment demands in the next two reviews.

More private sector, less state involvement

To show its commitment to divestment, the Madbouly government has prepared a pipeline of four state-owned asset sales expected to generate USD 1.5 bn by June, but the Fund makes a point of noting that “Even after adding the Qatari land sale valued at USD 3.5 bn, this is well short of the USD 6.5 billion required to meet the program’s original divestment objective.” As of December, the country’s “pipeline involves 11 additional divestment transactions in priority sectors, plus 5 military-owned companies, and 7 companies under the IPO program” in addition to management concessions at 11 airports, according to the report.

To ensure the program doesn't stall again, the government has launched a new multidimensional index to track the progress of the state ownership policy. The index provides an objective assessment of how effectively the state is reducing its economic footprint. It monitors key pillars of the reform plan, including the pace of divestments, the enforcement of competitive neutrality, and overall improvements to the business environment. This data-driven approach is intended to offer transparency to both the IMF and private investors, identifying exactly where bottlenecks in the privatization process remain.

A new centralized state-owned enterprise unit under the prime minister’s office will now act as the primary filter for the government's portfolio. This unit is responsible for sorting state-owned firms into three distinct tracks based on their strategic importance. Non-strategic firms that are ready for the market will be moved to a dedicated liquidation or sale unit, while strategic assets with high value-add potential will be transferred to the Sovereign Fund of Egypt. Kicking the can down the road for underperformers will be harder under this system, as entities requiring further restructuring will remain under the SOE unit's direct supervision until they are fit for exit or integration.

On the regulatory front, the state is moving to a digital-first model for the private sector to lower entry barriers. The government is currently preparing to launch a unified digital platform designed to streamline company formation and management across 275 different economic activities. This involves a complete re-engineering of establishment procedures, with the government pledging to publish periodic reports to track how effectively these changes are being implemented on the ground. These reforms — combined with the upcoming release of a revised state ownership policy document, which the IMF report says will be ready before the end of this month — aim to create the level playing field the IMF insists is necessary for a sustainable recovery.

Fiscally steady as she goes

The Gulf is double-locking its USD 18.3 bn deposits at the CBE to see the IMF program through to its December 2026 finish line. In a formal letter to the IMF, Finance Minister Ahmed Kouchouk and CBE Governor Hassan Abdalla confirmed they have secured “strong assurances” that GCC states will not withdraw their official deposits while the Extended Fund Facility is active. These funds could be later converted into direct investments.

Why it matters: The no-withdrawal pledge effectively removes the risk of a sudden run on the bank by GCC creditors, especially given the brewing regional geopolitical crisis. This safety net — in addition to the USD 6.9 bn secured in concessional and bilateral financing — is vital as the gov’t looks to plug a USD 17 bn financing gap over the next two fiscal years. Egypt needs roughly USD 13 bn this fiscal year and another USD 4 bn in the next fiscal year to meet its net international reserve targets, according to the report.

The Finance Ministry is also pivoting toward a more sophisticated debt strategy to bring the debt-to-GDP ratio down to 70%, according to the report. The plan involves swapping expensive short-term debt for longer-term instruments and launching a weekly sukuk program with 3-to-5-year tenors.

The IMF notes that Egypt’s ability to repay its debts remains “adequate,” but warned that high interest payments remain the biggest threat to the budget and that success depends entirely on sticking to the program's strict schedule. The government is committing to using 100% of the proceeds from Qatari Diar’s investment agreement, along with 50% of all other privatization revenues, specifically for debt retirement as it looks to cut total financing needs by 10% of GDP by 2027.

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