Negotiations between Egypt and the IMF over the fifth tranche of an $8 billion loan program have stalled, due to disagreements about the government’s continued involvement in strategic investment sectors, a senior official in the Ministry of Finance told Al Manassa.
The value of the fifth tranche, set to match the previous $1.2 billion installment disbursed in April, remains in limbo. According to a Cabinet statement issued last month, that installment was released under the program’s fourth review, part of the $8 billion loan agreement signed in 2022.
Talks over the fifth tranche broke down after IMF officials raised concerns about Egypt’s slow pace in implementing public sector reforms, including the privatization of state-owned enterprises and a reduction in the government's footprint across key industries.
“The IMF mission objected to the lack of progress on the state ownership policy and the delayed government exit from certain sectors,” the official told Al Manassa, speaking on condition of anonymity. “They viewed it as a setback to the goals of debt reduction and fiscal discipline.”
The IMF delegation has been in Cairo for two weeks, meeting with Egyptian officials to conduct the fifth program review. Discussions have focused on restructuring state institutions, merging public economic bodies, and implementing the State Ownership Policy Document, which outlines plans to scale back government participation in the economy.
A second government source confirmed the disagreement, noting that IMF officials also expressed dissatisfaction with delays in the IPO program, a key plank of the 2022 IMF reform package.
The same source added that the IMF urged greater flexibility in the exchange rate regime, saying Egypt's current monetary policy is hampering investor confidence. However, the government resisted this request, citing concerns that a more liberalized exchange rate could worsen inflation and heighten the economic burden on citizens.
In March 2024, the Central Bank of Egypt pledged to allow market forces to determine the value of the Egyptian pound and raised interest rates by 6% in a bid to tame inflation.
In response to IMF concerns, Egyptian authorities presented a restructuring plan affecting 59 state-owned economic entities, including proposals for mergers, asset liquidation, and converting some into general authorities. Nevertheless, IMF officials reportedly emphasized the urgency of execution, arguing that timely implementation is essential for a full and accurate assessment of Egypt's fiscal position.
The official also reiterated Egypt's intention to offer stakes in 11 companies and banks starting next month, either through public offerings or sales to strategic investors. The plan is part of a broader privatization strategy agreed under the IMF program.
The IMF loan agreement, signed in 2022, faced earlier setbacks, including delays in the first two program reviews. However, the reform agenda gained momentum in March 2023 following a devaluation of the pound and a major influx of Emirati investments. The IMF subsequently expanded the loan size from $3 billion to $8 billion, partly to offset revenue losses from the Gaza war's impact on Suez Canal trade.
In March 2025, the IMF's Executive Board approved an additional $1.3 billion under the Resilience and Sustainability Facility, to be disbursed in tranches.
