The loan, granted under the IMF's Resilience and Sustainability Facility (RSF), will fund several structural reforms designed to accelerate Egypt's transition to a greener economy. The focus will be on reducing carbon emissions and enhancing climate resilience.
In a joint statement, the Ministries of Finance and Environment confirmed that the loan was a key element of Egypt’s broader climate strategy, which includes meeting its Nationally Determined Contributions (NDCs) for 2030.
This funding will help Egypt implement key reforms across several sectors, including carbon reduction, climate risk management, and strengthening the country’s financial sector to withstand the impacts of climate change.
On Monday, the IMF’s Executive Board completed the fourth review of Egypt’s economic reform programme under the Extended Fund Facility (EFF), granting Egypt access to about $1.3 billion.
These financial packages are critical in helping Egypt address its immediate economic challenges and long-term sustainability goals.
The IMF’s approval of the $1.3 billion loan is part of a broader $2.5 billion financing package approved for Egypt, which increases the country’s total purchases under the EFF to about $3.2 billion out of a total of $8 billion.
In December, the IMF first laid out the staff-level agreement with Egypt, clearing the path for this $1.3 billion disbursement under the EFF’s fourth review. This was part of an expansive, 46-month loan deal signed in March 2024, reshaping Egypt’s economic trajectory.
The reforms come as part of a comprehensive framework developed in collaboration with several Egyptian ministries and other relevant authorities, including the Central Bank and the Ministry of Foreign Affairs. Egypt’s Ambassador to Vienna, Mohamed Nasr, also participated in negotiations surrounding the financing deal.
In 2022, Egypt unveiled its National Climate Strategy 2050, a visionary roadmap for a sustainable future. Despite this ambitious launch, the country has only made two updates to its Nationally Determined Contributions (NDCs) in recent years, raising concerns about the pace of its climate action.
The IMF’s approval of the $1.3 billion loan signals a significant step in Egypt’s broader efforts to stabilize its economy while taking bold action on climate change.
The joint effort spans multiple sectors, with contributions from the Ministries of Finance, Planning and Economic Development, International Cooperation, Environment, Petroleum, Electricity and Energy, Water Resources and Irrigation, and the Cabinet’s Decision Support Centre.
As Egypt prepares for the upcoming COP30 conference, this new loan will also help strengthen the country’s position in international climate negotiations. It highlights the political leadership’s prioritization of climate change as an existential issue, crucial for ensuring the planet’s sustainability.
The loan will also reinforce Egypt’s standing in multilateral climate cooperation and demonstrate the country’s commitment to a just-green transition.
The reforms outlined in the loan package include accelerating Egypt’s carbon reduction process, improving the management of climate-related financial risks, enhancing climate data and risk management, and building the country’s capacity to adapt to climate impacts.
The loan will also bolster Egypt’s financial sector’s ability to respond to climate challenges and ensure that investment plans align with national climate goals. These measures aim to fulfil Egypt's commitments under the Paris Agreement, positioning the country for a sustainable, green transition.
The structural reforms, which will be implemented in tranches over time, are designed to ensure that Egypt meets its long-term climate objectives while fostering sustainable economic growth.
Despite ongoing economic challenges, including regional tensions and severe trade disruptions, the IMF has acknowledged Egypt's progress in stabilizing its economy, with GDP growth rebounding and inflation trending downward.
The IMF’s support reflects its recognition of Egypt's efforts to balance economic recovery with ambitious climate goals. This financial assistance underscores the importance of Egypt’s climate reforms, particularly as the country seeks to meet its obligations under the Paris Agreement while enhancing economic resilience.
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