The International Monetary Fund said that talks on a multi-billion dollar loan to stabilize Egypt's finances had made progress, noting steps taken by Cairo to adjust energy subsidies.
In a statement on the IMF's staff visit to Egypt over the past two weeks, mission chief Andreas Bauer applauded initial moves to adjust policy by the Egyptian government.
"The mission made progress in the discussions with the Egyptian authorities on their economic program and possible financial support from the IMF," he said.
"The authorities have already taken valuable first steps to improve the targeting of energy subsidies and are seeking to broaden their revenue base.
"They intend to build on these steps with further actions to address, in a socially balanced way, the country's fiscal and balance of payments deficits, and create conditions for a sustained recovery of the economy."
Bauer also said the IMF group was encouraged by "the constructive positions and views" of representatives of political parties on economic reforms and a possible IMF loan program.
"All sides concurred on the need to protect the vulnerable sectors of society when implementing reform measures."
He said talks on the loan will continue.
Egyptian authorities have said the talks are about a $4.8 bn financing program that would require considerable reforms.
But concluding the deal has been held up in part by the inability of the Egyptian government to build a consensus behind the program from various political groups.
Last Wednesday, Qatar announced that it would buy bonds from cash- strapped Egypt worth $3 bn, on top of a previously announced aid package, to help the government keep up with its obligations.