IMF Conditions for Egypt to Unlock $274 Million includes Fuel Subsidy Cuts, Accelerated Privatization

The International Monetary Fund (IMF) has tied the disbursement of $274 million to Egypt, under the Resilience and Sustainability Facility (RSF), to two key reforms: advancing the government’s privatization program and cutting fuel subsidies. 

The fuel subsidy decision will be reviewed by the Petroleum Pricing Committee next month, according to a source familiar with the matter who spoke to Al-Sharq on condition of anonymity.

IMF spokesperson Julie Kozack confirmed earlier that the scheduled payments to Cairo would not be released until two reforms are completed, without specifying them. Each measure is linked to a tranche of around $137 million, to be assessed during the first program review in the fall. That review will coincide with the fifth and sixth reviews of Egypt’s Extended Fund Facility (EFF).

According to a government document seen by Bloomberg Al-Sharq, Egypt aims to raise $3 billion during the current fiscal year by divesting from state-owned assets and scaling back its role in investment and economic activities. The plan involves two tracks: selling stakes in state-owned companies and partnering with the private sector in infrastructure projects.

The government is also preparing to unveil a long-term economic roadmap dubbed the “National Narrative for Economic Development,” covering the periods through 2030 and 2050. The plan is expected to be put up for public debate for two months before being finalized at the end of the year.

In March 2024, Egypt reached an agreement with the IMF to expand its support program from $3 billion to $8 billion, helping the country attract much-needed financing amid an economic crisis that began in early 2022. Cairo has since received $3.2 billion, including $1.2 billion in March after completing the fourth review of the EFF.

But progress has slowed. IMF officials have grown frustrated with Egypt’s delays in reducing its role in the economy and divesting state-owned enterprises. As a result, the IMF has decided to merge the fifth and sixth program reviews.

The privatization program has also hit roadblocks. The sale of Banque du Caire to Emirates NBD stalled earlier this year due to valuation disputes. Meanwhile, investors are still awaiting the offering of “Wataniya” and “Safi,” two subsidiaries of the military’s National Service Projects Organization, after the Sovereign Fund of Egypt and the military signed agreements with EFG Hermes and CI Capital to prepare them for listing.

On the fiscal side, the government has set a target of cutting fuel subsidy allocations to 75 billion Egyptian pounds ($1.55 billion) in the 2025/26 budget. Prime Minister Mostafa Madbouly previously announced plans to gradually eliminate fuel subsidies by the end of 2025, while maintaining partial support for diesel and cooking gas cylinders.

The IMF’s conditions reflect a wider push for structural reforms in Egypt’s economy: limiting the state’s footprint, boosting private sector participation, and reducing costly subsidies. However, with public discontent over inflation and rising living costs, implementing these measures could prove politically challenging.