The successful conclusion of the third review under the Extended Arrangement of the EFF on Monday now paves the way for Egypt to access an $820 million tranche.

This tranche is part of an extended $8 billion loan agreement finalized between Egypt and the IMF in March to bolster the nation’s resilience against the mounting impact of regional geopolitical tensions on the macroeconomy.

In March, the IMF completed the first and second reviews of the programme, increasing the total programme by $5 billion from the original $3 billion and enabling Egypt to unlock $820 million.

Egypt's 46-month EFF arrangement, approved in December 2022, is slated to conclude in September 2026.

Realizing economic reform vision
 

On Tuesday, in a cabinet meeting in New Alamein, Madbouly underscored that this recent milestone marks a crucial stride towards realizing the nation's economic reform vision.

He emphasized that this development signifies a vote of confidence in the Egyptian government's comprehensive programme, encompassing financial and economic reforms and targets.

Moreover, he said the country’s current economic indicators reflect positive momentum.

The government has achieved positive indicators for budget performance during the fiscal year 2023/2024, with an ambitious start for FY2024/2025, Madbouly said.

“We have started the current fiscal year with ambitious indicators despite economic pressures and unfavourable external conditions,” Madbouly stated.

He affirmed the government's commitment to continuously working to reduce the debt-to-GDP ratio.

Macroeconomic improvement
 

In its evaluation, the IMF noted that Egypt's macroeconomic landscape has shown signs of improvement since the combined approval of the first and second reviews of the programme.

It also highlighted that Egypt has fulfilled its commitments regarding key macroeconomic challenges.

“Inflationary pressures are gradually abating, foreign exchange shortages have been eliminated, and fiscal targets (including related to spending by large infrastructure projects) were met,” the IMF statement read.

These improvements are beginning to bolster investor confidence and positively impact sentiment in the private sector, the IMF added.

Furthermore, it noted that Egypt’s ongoing fiscal consolidation efforts under the programme are taming the high debt level and keeping it on “a decisive downward path.”

The fund also underlined the imperative of maintaining a flexible exchange rate regime and a liberalized foreign exchange system to avoid a buildup of external imbalances.

It added that the Central Bank of Egypt (CBE) also needs a data-driven approach to lower inflation and inflation expectations.

However, the fund noted that further efforts are required to implement the State Ownership Policy, launched by Egypt in 2022 to empower the private sector.

It also called for bolstering the financial sector's resilience, governance practices, and competition in the banking sector as key priorities for the government at the time being.