A delegation from the International Monetary Fund arrived in Cairo on Monday to start the final review of Egypt's US$8 billion loan program from 2022. The two sides are set to address the government's slow privatization pace and growing reliance on hot money for liquidity. Egypt's macroeconomic indicators have improved recently as the country moves past the peak of its economic crisis.
The government's slow progress on its privatization plan led to the postponement of the fifth program review and its merger with the sixth, according to informed sources who spoke to Mada Masr. IMF spokeswoman Julie Kozak attributed the delay to sluggish privatization efforts. Egypt requested the merger to secure deals for dollar inflows and private sector expansion, per Fakhry al-Fekky, head of the outgoing House of Representatives' Planning and Budgeting Committee.
The New Urban Communities Authority finalized a US$29.7 billion deal with Qatar's sovereign wealth fund for developing state lands in Alam al-Roum on the North Coast, but delays in withdrawing from state assets remain contentious. The IMF prioritizes the State Ownership Policy, outlining a phased exit from state-dominated sectors, sources from the Cabinet and World Bank told Mada Masr. The government has failed to advance sales of stakes in 32 companies listed for privatization in 2023, including firms long promised for private sector opening but repeatedly stalled.
A World Bank source said: "Investors don’t want to see lots of state-owned companies, especially in the commercial goods and services sectors." The government hesitates due to lowball offers and unfavorable Egyptian Exchange conditions, according to Cabinet and parliamentary sources. Prior sales generated $5.6 billion from entities like Alexandria Container and Cargo Handling Company, MOPCO, Abu Qir Fertilizers, Fawry, Commercial International Bank, Eastern Company, and Telecom Egypt. Sales of stakes in military-owned Safi mineral water and Wataniya Petroleum have been delayed despite IMF criticism.
The IMF expected $3 billion from privatization by the end of fiscal year 2024/25, but only $600 million has been secured. Dollar inflows improved with $36.5 billion in expatriate remittances, 23 percent export growth in Q3, and projected $17.6 billion in tourism revenue. Foreign reserves exceeded $50 billion in October. Hot money reached LE875 billion ($42 billion), estimated at $50 billion, offering 10 percent real returns.
A Cabinet source said the IMF will address reliance on volatile hot money, from which $20 billion withdrew after Russia's Ukraine invasion. The review atmosphere is calm as the program nears its October 2026 end, with flexibility on energy subsidy cuts to curb inflation at 10.1 percent. The Central Bank cut rates by 5.25 percentage points. Egypt has received $2.84 billion in prior tranches, with $2.6 billion possible upon approval.