Egypt, grappling with high inflation and shortages of foreign currency, agreed to the US$8 billion, 46-month facility in March.

A sharp decline in Suez Canal revenue caused by regional tensions over the last year compounded its economic woes.

The IMF said Egypt’s government had agreed to increase its tax-to-revenue ratio by 2% of gross domestic product over the next two years, with a focus on eliminating exemptions rather than increasing taxes.

“This would give it space to increase social spending to help vulnerable groups,” the IMF said in a statement.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilisation efforts,” the statement said.

Egypt had agreed to make more decisive efforts to ensure the private sector became the main engine of growth and to sustain its commitment to a flexible exchange rate, the IMF statement added.

The staff-level agreement of the fourth review must still be approved by the IMF’s executive board.