Initially agreed upon in 2022, the financial aid package had seen multiple disbursement delays as Egypt failed to meet several IMF-imposed benchmarks. The IMF’s recent review, concluded in late July but disclosed at the end of August, indicates a softening of the requirements while still emphasizing the importance of long-term economic restructuring.
Key changes include extending deadlines for vital fiscal audits and the recapitalization of Egypt's central bank. Originally, these audits were due by March, but the IMF has now pushed this deadline to November, citing pending legislative amendments. Similarly, the deadline for developing a recapitalization plan for the central bank, initially set for April, has been delayed until the end of August. This extension allows Egyptian authorities more time to assess the required capital and formulate a strategic approach.
Another significant adjustment relates to the pricing of retail fuel. While the IMF had previously insisted on quarterly price increases, the new terms allow Egypt to replace these hikes with a firm commitment to aligning fuel prices with cost-recovery levels by the end of 2025. This change reflects the IMF's recognition of Egypt's ongoing economic challenges, particularly amid global inflationary pressures.
The IMF’s board had been scheduled to review these conditions in mid-July, but the meeting was postponed following Egypt’s decision to raise fuel prices by up to 15%, a move likely intended to demonstrate compliance with the IMF's stringent requirements.
The softening of conditions is seen as a necessary adjustment by the IMF to accommodate Egypt's economic realities while ensuring that long-term structural reforms are not compromised. As Egypt continues to navigate its complex economic landscape, these relaxed conditions may provide the breathing room needed to stabilize the economy and adhere to the broader reform agenda laid out by the IMF.