The International Monetary Fund said Tuesday that it has reached a deal with Egyptian authorities allowing the country access to about $1.2 billion.

The funding access is subject to executive board approval.

"The Egyptian authorities have continued to implement key policies to preserve macroeconomic stability, despite ongoing regional tensions that are causing a sharp decline in Suez Canal receipts," said Ivanna Vladkova Hollar, who led the IMF mission involved in discussions with Egyptian authorities.

She added in a statement that "continued implementation of fiscal consolidation efforts will be necessary to preserve debt sustainability, and reduce large interest costs and gross domestic financing requirements."

The deal comes as both sides reached staff-level agreement on the fourth review under the Extended Fund Facility arrangement, the fund said.

Vladkova Hollar also noted that authorities' plans to streamline and simplify the tax system were commendable, but that "further reforms will be needed to enhance domestic revenue mobilization efforts."

"A comprehensive reform package is needed to ensure that Egypt rebuilds fiscal buffers to reduce debt vulnerabilities, and generates additional space to increase social spending, especially in health, education and social protection," said Vladkova Hollar.

The discussions culminating in the deal were held in person from November 6-20 and virtually afterwards.