The International Monetary Fund has set next June as the deadline for completing Egypt’s seventh review, which is the penultimate review, allowing the disbursement of $1.65 billion, representing a segment of the resilience and flexibility program complementary to the basic program.

The Egyptian government intends to approve a new tax package that includes further restrictions on the exemptions granted to value-added tax, and the application of pricing rules for transactions between related parties, in addition to imposing a tax on the dividends of state-owned companies.

According to the documents of the fifth and sixth reviews of Egypt’s program with the International Monetary Fund, which were published by the Fund, this package is expected to contribute to increasing the ratio of tax revenues to GDP by about 2% during the period extending from the fiscal year 2024/2025 to the fiscal year 2026/2027.

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To ensure the implementation of all agreed-upon measures to increase tax revenues, the new tax package, in addition to the remaining measures that were scheduled for the fiscal year 2025/2026, will be included in the budget for the fiscal year 2026/2027, with parliamentary approval being obtained by the end of June 2026.

Egypt aims to complete four offerings before the end of its program with the International Monetary Fund next December, with a total value estimated at about $1.5 billion, half of which will be allocated to reducing the amount of debt.

The documents indicated that Egypt identified the four companies and their affiliated entities, within the framework of supporting the government’s exit from non-strategic sectors, which enhances the private sector’s ability to compete.

The Fund stated that although the entire proceeds of the “Alam Al-Rum” deal were allocated to achieve the goals of the government exit program, what was achieved is still less than the original goal of the program, which amounts to $6.5 billion.

He added that the Qatari deal contributed to reducing the amount of debt, but it did not have a tangible impact on enhancing competition between the public and private sectors.

Debt management plan

The International Monetary Fund explained that Egypt is taking several ways to reduce its debt needs in the short term, including:

Debt swaps with local institutions to convert short-term debt into longer-term instruments.

Swapping debt for equity in sovereign assets backed by land.

Launching a new weekly program for issuing sukuks with maturities ranging between 3 and 5 years.

Implementing structural reforms to strengthen public debt management, including:

– Establishing an independent central debt management unit within the Ministry of Finance, which will assume responsibility for the entire debt portfolio.

– Developing the local debt market and adopting a medium-term strategy that ensures better coordination between various sources of financing, while giving priority to concessional financing.

– Developing the institutional structure for debt management by creating specialized units for risk management, preparing reports, and developing financing tools, in addition to modernizing information systems.

Establishing a national coordination mechanism and a higher debt management committee that includes those concerned with monetary policy and planning.