Egypt, grappling with high inflation and shortages of foreign currency, agreed to the $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 mobilization efforts," the statement said.

--Reuters--