Ahmed Kamel – Egypt Daily News
The International Monetary Fund (IMF) has given conditional approval for the release of the fifth and sixth instalments of Egypt’s $8 billion loan program, signaling cautious confidence in Cairo’s reform efforts while keeping pressure on the government to accelerate key economic changes.
According to sources familiar with the negotiations, the IMF is prepared to disburse the final $1.7 billion before the end of 2025, pending Egypt’s fulfillment of several policy commitments agreed upon during last week’s IMF–World Bank annual meetings in Washington. The decision follows several days of intense talks between Egyptian officials and IMF representatives, described by both sides as “constructive yet demanding.”
The Egyptian delegation led by Central Bank Governor Hassan Abdullah and including the ministers of finance, economic development, planning, and investment presented an updated roadmap for economic reform. The plan focuses on stabilizing inflation, attracting foreign investment, and strengthening the role of the private sector.
In a statement, Egypt’s cabinet said that discussions were “more positive than expected,” with broad alignment between Cairo and the IMF on policy priorities for the next phase of cooperation. These include maintaining monetary stability, curbing inflationary pressures, and implementing structural reforms designed to make Egypt’s economy more resilient and export-driven.
Economist Abdel Nabi Abdel Muttalib noted that the most pressing issue remains the country’s persistent shortage of foreign currency, which continues to strain the banking system and hinder imports. “The IMF concluded that the levels of foreign currency available in banks are insufficient to meet import demand,” Abdel Muttalib said. “Egypt’s challenge is not only to secure the remaining loan instalments but also to restore investor confidence by showing that its reforms can deliver sustainable growth.”
Officials have reportedly requested an additional $1.3 billion in supplementary financing to help stabilize the currency and support investment in productive sectors, shifting the government’s focus from closing fiscal gaps to expanding exports and manufacturing capacity.
However, IMF approval comes with strict conditions. Sources cited said the Fund has set two primary benchmarks for continued cooperation: maintaining a flexible, market-driven exchange rate free from central bank intervention, and significantly increasing proceeds from privatisation. So far, Egypt has achieved only about half of its 2025 target for selling state assets, a key measure designed to attract foreign capital and reduce the state’s footprint in the economy.
Egypt’s partnership with the IMF dates back to 2016, when it secured a $12 billion loan to rescue an economy plagued by high inflation, a growing budget deficit, and chronic shortages of foreign reserves. Since then, successive IMF agreements have pushed Cairo to phase out costly fuel, electricity, and food subsidies while expanding social safety nets to protect the most vulnerable.
In line with those commitments, the Egyptian government implemented another round of fuel price hikes earlier this month, the second this year raising petroleum product prices by between 10.5% and 12.9% after an earlier 15% increase in April. Officials argue that reducing subsidies is necessary to rein in the budget deficit, even as consumers face rising living costs and a weakened Egyptian pound.
The IMF’s conditional endorsement represents a cautious vote of confidence in Egypt’s economic trajectory, but analysts warn that the country’s long-term stability depends on whether it can sustain reforms beyond external financing cycles. As one economist noted, “The IMF can provide breathing room, but the real test will be whether Egypt can translate these reforms into tangible growth, job creation, and restored trust from both domestic and international investors.”
With the final tranches now within reach, Cairo faces a pivotal year balancing the need for fiscal discipline with mounting social and political pressures at home.
