The International Monetary Fund expects Egypt’s external financing gap to reach $8.2 billion in the current financial year, according to its fourth review of the Extended Fund Facility released on Tuesday. The IMF anticipates that privatization proceeds will play a key role in covering the shortfall.
In the fourth loan review, the IMF stated: “Expected dollar inflows from asset sales will amount to $0.6 billion in fiscal year 2024–2025, $3 billion in FY2025–2026, and $2.1 billion in FY2026–2027.”
The external financing gap is the result of a mismatch between sources of foreign revenue, such as foreign direct investment and portfolio inflows, and external obligations, including current account deficits and debt repayments. The gap is typically covered through borrowing or by selling public assets.
The report noted that total privatization proceeds since March 2022 have amounted to $5.7 billion. However, since October 2023, there have been no new offerings aside from two small deals: a partial sale of United Bank and the divestment of a small microfinance company.
Earlier this month, Al Manassa quoted a senior source at the Ministry of Finance as saying the government was moving to accelerate the privatization program. This follows the IMF’s recent decision to postpone disbursing the fifth tranche of $1.2 billion for six months, pushing it to the end of the year.
Several privatization deals have stalled in recent months. The latest, as reported by Al Manassa in May, was the collapse of negotiations to sell Banque du Caire to Emirates NBD due to low bids.
Other revenue sources cited by the Fund to cover the financing gap in the fiscal year that began this month include $2.4 billion from the EFF loan. However, Egypt is also due to repay $3 billion in previous IMF loans during the same year.
Egypt turned to the IMF in December 2022 to secure a loan aimed at easing foreign currency shortages triggered by the Russia-Ukraine war. Implementation of the program stalled in 2023 amid disagreements over economic policy. The IMF resumed the program in 2024, raising its value from $3 billion to $8 billion.
In March, the Fund approved a Resilience and Sustainability Facility agreement, granting Egypt an additional $1.3 billion.
The IMF also forecast that Egypt’s central bank will receive $2 billion in new deposits in FY2025–2026 to help finance the external gap.
The report further noted that Egypt has “assurances that $18.3 billion in deposits from official Gulf Cooperation Council creditors at the Central Bank of Egypt will not be withdrawn until the end of the EFF program in October 2026, unless these deposits are used to purchase equity stakes in companies. The foreign currency proceeds from such sales will remain part of the central bank’s foreign reserve assets.”
