The International Monetary Fund (IMF) said on Wednesday that it had reached an agreement at the expert level on the fourth review under the extended fund facilitation agreement with Egypt, which could allow the disbursement of $1.2 billion under the program.
In March, Egypt, which suffers from high inflation rates and foreign exchange shortages, agreed to a $8 billion facility over a 46-month period. The sharp decline in Suez Canal revenues as a result of regional tensions over the past year has exacerbated its economic crisis.
The IMF said the Egyptian government agreed to increase the tax-to-revenue ratio of 2% of GDP over the next two years, focusing on removing exemptions instead of increasing taxes.
It added in a statement that this would allow for increased social spending to help vulnerable groups.
“While the authorities' plans to regulate and streamline the tax system are commendable, further reforms are needed to boost domestic revenue mobilisation efforts,” the statement said.
He explained that Egypt agreed to make more decisive efforts to ensure that the private sector becomes the main engine of growth and maintain its commitment to a flexible exchange rate.
The agreement at the expert level on the fourth revision still needs to be approved by the IMF Executive Board.
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