Today, Sunday 5 October, EIPR publishes its new report in the "Eye on Debt" series, which analyses the Fourth Review of Egypt’s agreement with the International Monetary Fund (IMF) regarding the Extended Fund Facility (EFF) programme. This release follows a series of delays that have faced the Fund's reviews since the agreement was signed in late 2022, resulting from disagreements over the IMF's conditions related to the Egyptian pound's exchange rate against the dollar and the government's plan to exit various economic sectors.

The IMF's conditionality has not changed significantly in the Fourth Review, but the review report suggests that the Fund appears more stringent regarding the economic role of sovereign bodies. The report pointed to the dominance of military companies over strategic economic sectors, which impedes private sector entry into those sectors. Furthermore, the Fourth Review report mentions that the Egyptian government published the household income, expenditure and consumption  survey data, but in reality, it only published the raw data. The government did not publish the analytical report of the income and expenditure survey, which constitutes a circumvention of the Fund's conditionality.

In its reading of the IMF review report, EIPR found that the Fund continues to focus on market reforms that prioritise private sector participation in economic activity. While important, this condition does not address the fundamental structural problem of the Egyptian economy, which is better summarised by the absence of both public and private investment in productive sectors.

EIPR stresses that any alternative path requires an integrated strategy for debt management based on the principle of budget unity and setting a clear ceiling for borrowing, alongside a fair tax reform strategy that relies on progressive income and wealth taxes instead of expanding the Value Added Tax (VAT), as the IMF recommends, since the latter increases the burdens on the poor.

The report also calls for enhancing transparency in state contracts and divestment programmes, separating the issue of asset sales from managing the current crisis, and increasing cash transfers for the poorest segments to at least the national poverty line. EIPR affirms that genuine economic sustainability can only be achieved through policies based on community participation, transparency, and social justice, rather than through narrow compliance with the demands of international creditors.

Read the full report here