Ahmed Kamel – Egypt Daily News
The International Monetary Fund has approved the immediate disbursement of approximately $2.3 billion to Egypt after the Fund’s Executive Board completed the fifth and sixth reviews of the country’s economic reform program supported by the Extended Fund Facility (EFF), along with the first review under the Resilience and Sustainability Facility (RSF).
According to the IMF statement, Egypt is entitled to draw about $2 billion (1.465 billion SDR) under the EFF arrangement, in addition to roughly $273 million (200 million SDR) under the RSF. This brings total disbursements to Cairo under the two programs to about $5.207 billion (3.886 billion SDR), equivalent to 190.7 percent of Egypt’s IMF quota.
The 46-month EFF program, originally approved on December 16, 2022, now runs until December 15, 2026 following its extension.
Improving macroeconomic indicators
The Fund said Egypt’s macroeconomic conditions have improved as stabilization policies take hold, supported by tighter monetary and fiscal policies and greater exchange rate flexibility.
Real GDP growth accelerated to 4.4 percent in fiscal year 2024/2025, while inflation declined to 11.9 percent in January 2026. The current account deficit narrowed to 4.2 percent of GDP, helped by strong remittance inflows and tourism revenues.
Market confidence has continued to strengthen, underpinned by successful external bond issuances, foreign direct investment inflows, and record nonresident investments in local debt instruments.
The improvement in Egypt’s external position, together with exchange rate flexibility, helped lift gross international reserves from $54.9 billion in December 2024 to about $59.2 billion by the end of December 2025.
On the fiscal front, performance improved due to lower public investment and higher tax revenues. However, the primary balance fell short of the program target amid the absence of expected proceeds from planned state asset divestments.
Climate reform progress, uneven structural momentum
The IMF noted solid progress in implementing the Resilience and Sustainability Facility. Egyptian authorities completed two key reform measures: publishing a detailed timetable for renewable energy targets and issuing guidance requiring banks to monitor and disclose their exposure to climate transition risks.
However, the Fund described progress on deeper structural reforms as uneven. It pointed to slower-than-expected movement in reducing the state’s role in the economy, particularly regarding the divestment of non-strategic assets. Elevated public debt and large gross financing needs continue to constrain fiscal space and weigh on medium-term growth prospects.
Priorities for the next phase
The IMF emphasized that Egypt’s central challenge is shifting toward a more sustainable, private-sector-led growth model. While the government’s National Economic Development Narrative provides an important framework for boosting competitiveness and private participation, the Fund stressed the need to accelerate reforms.
Key priorities include maintaining exchange rate flexibility, continuing the disinflation path, strengthening domestic revenue mobilization, and implementing a comprehensive debt management strategy. The Fund also underscored the importance of protecting social spending and safeguarding vulnerable groups.
The statement further highlighted the need to advance governance reforms in state-owned enterprises and banks, while continuing climate-related reforms to support more resilient, inclusive, and sustainable growth.
Risks remain, but upside potential exists
The IMF warned that significant downside risks persist, including rising regional geopolitical tensions, tighter global financial conditions, and potential delays in energy sector and structural reforms.
At the same time, the Fund pointed to possible upside scenarios. A faster recovery in Suez Canal activity or higher hydrocarbon production could strengthen fiscal and external balances. Large-scale investment projects backed by Gulf partners in recent years could also provide positive momentum for foreign direct investment.
Emphasis on debt sustainability and exchange rate flexibility
IMF Deputy Managing Director and Acting Chair Nigel Clarke said Egypt’s stabilization measures are beginning to yield results, citing stronger growth, declining inflation, and an improved external position. Fiscal consolidation, he noted, has helped contain demand pressures and reduce debt ratios.
Clarke stressed the importance of further progress in divesting from non-strategic sectors and strengthening debt management to attract private investment, reduce financing needs, and support more sustainable and inclusive medium-term growth.
He also called for broadening the tax base by reducing exemptions, particularly in value-added tax, improving tax compliance, and fully implementing recently approved tax measures. Strengthening transparency and oversight of off-budget entities and accelerating the divestment program were also highlighted as priorities.
Maintaining a flexible exchange rate regime remains critical to preventing the re-emergence of external imbalances, Clarke said, urging that any central bank intervention be limited to addressing disorderly market conditions and conducted transparently. He also encouraged continued reserve accumulation and stronger risk management practices in state-owned banks.
Clarke concluded that reducing the state’s economic footprint is essential to achieving dynamic, export-led growth. He warned that the impact of trade facilitation, digitalization, and business climate reforms will remain limited without tangible progress on the divestment agenda, alongside continued implementation of macro-critical climate reforms.
The IMF had previously approved $1.3 billion in financing for Egypt under the RSF in March to support implementation of the country’s National Climate Change Strategy 2050 and advance the transition toward a lower-emissions, more climate-resilient economy.
The completion of the reviews underscores continued close cooperation between Cairo and the IMF and reinforces international confidence in Egypt’s economic reform path as the country seeks to consolidate macroeconomic stability, improve the investment climate, and accelerate sustainable growth.
