Egypt’s real GDP grew by 4.5 per cent in the 2024-25 fiscal year, exceeding the budget’s projection of 4.2 per cent and almost doubling the growth rate of the year before, Finance Minister Ahmed Kouchouk announced earlier this week.
Boasting of the results of the fiscal year, the minister said that there was strong growth in the non-oil manufacturing sectors, tourism, and communications and information technology. Moreover, he said that the private sector had proven its ability to grow and compete, accounting for about 60 per cent of total investments.
A couple of days before Kouchouk’s statements, the Monetary Policy Committee of the Central Bank of Egypt (CBE) decided to cut the overnight deposit rate, overnight lending rate, and the rate of main operations by 200 basis points to 22 per cent, 23 per cent, and 22.5 per cent, respectively.
Expanding economic activity and decelerating inflation have prompted the CBE to resume the monetary easing cycle it began in April, after pausing it in July.
These factors are all promising, believes Hesham Shafick, a professor of strategic management at the German International University (GIU) in Cairo. The outlook is much better than it was six months ago, he added, pointing to improved foreign currency inflows.
July saw the highest-ever inflow of foreign currency in Egypt’s history, totalling $8.5 billion, Prime Minister Mustafa Madbouli said during the weekly cabinet press conference last Wednesday.
He said the sum excludes hot money, a reference to the sustainability of the inflows.
Moreover, the banking system’s net foreign assets (NFAs) increased by around 24 per cent in July to $18.5 billion, according to CBE data. This is almost a 40 per cent increase compared to the same time last year.
NFAs are the sum of foreign assets and deposits held by banks minus their foreign liabilities.
According to economic adviser Ahmed Rashad, the Egyptian economy has shown signs of gradual recovery, with growth improving, inflation easing, though still at double-digit levels, unemployment declining, and remittances rising sharply.
Remittances from Egyptians working abroad increased by 66.2 per cent to a record of $36.5 billion during fiscal year 2024-25 compared to $21.9 billion in 2023-24. Rashad noted that these trends suggest that macro stability has been restored.
According to Shafick, the stability and the improved foreign currency situation is an opportunity to allow the pound to depreciate slightly. That would guarantee further hard currency availability, support investors’ confidence, and line up with International Monetary Fund (IMF) recommendations, he said.
Egypt is due this month for the fifth and sixth combined reviews of its Extended Fund Facility (EFF) with the IMF.
According to Rashad, Egypt has already done the difficult homework. The government has devalued the currency significantly, raised fuel prices, increased the cost of subsidised bread, and lifted charges on electricity and utilities.
With these politically and socially difficult measures already implemented, and in the light of recent positive developments, there appear to be no major obstacles to meeting the requirements of the next IMF review, Rashad said.
The fifth review was postponed due to slow progress on reforms such as the sale of stakes in state-owned companies.
Economist Hany Genena, head of research at Al-Ahly Pharos writing in a July note about the economy for law firm Mohram and Partners, wrote that Egypt is in the last leg of its 46-month EFF programme that was signed in 2022.
During the remaining time, it should see the elimination of energy and fossil fuel subsidies to achieve cost recovery and the acceleration of the asset sale programme.
The government is preparing to list 10 to 40 per cent stakes in several state-owned companies, news website Enterprise said this week. The state targets raising around $3 billion in proceeds by June, down from a previous goal of $5 to $6 billion, it added.
While improvements have been acknowledged, Rashad said inflationary pressures in recent years have pushed the national poverty rate up, however. Inflation also reached a high of 38 per cent in September 2023. Though no recent figures are available, the poverty rate stood at around 30 per cent in fiscal year 2019-20 according to Egypt’s statistics agency.
Rashad also said Purchasing Managers’ Index (PMI) numbers suggest that the private sector remains subdued. The index is a monthly survey that provides insight into the health of the manufacturing sector. The S&P Global Egypt PMI rose to 49.5 in July 2025 from 48.8 in June. A reading above 50 indicates an expansion of the non-oil private sector compared to the previous month; below 50 represents a contraction.
Rashad added that although stability has returned at the macro level, pre-geopolitical crisis structural challenges such as the poor education system, low productivity, and low-level exports persist and continue to weigh on households and firms.
Egypt’s economy is at a critical juncture, requiring a new path beyond the IMF programme to ensure sustainable growth and stability, Mahmoud Mohieldin, Egyptian economist and UN special envoy on financing for development, has reiterated across various platforms.
He said that increasing investment and reducing the reliance on debt, whether domestic or foreign, were crucial to achieving sustainable development, competitiveness, eradicating extreme poverty, and ensuring the fairer distribution of incomes and wealth.
He emphasised the need for a comprehensive national programme that focuses on human investments through education, healthcare, and investing in infrastructure and technology. He stressed that a competitive economy can only be achieved by facilitating the business environment, reducing the cost of financing, and localising development by stimulating growth across the different governorates.
The government says that such a plan is in the works. Madbouli said during the weekly cabinet press conference that Egypt has a clear post-IMF vision and that the government is finalising a comprehensive plan outlining the country’s development and economic strategy through 2030.
Egypt is also striving on various fronts to attract investments. Earlier this week, Madbouli was in China on behalf of President Abdel-Fattah Al-Sisi to attend the Shanghai Cooperation Organisation (SCO+) Summit held in Tianjin.
He talked with Chinese President Xi Jinping and other policy-makers about boosting Chinese investments in Egypt. Chinese investments have been on the rise lately, reaching more than $9 billion by the end of 2024 from $6.8 billion in 2020.
A $7.5 billion package of Qatari investments will hopefully soon see the light as well. Madbouli met with his Qatari counterpart last Thursday and addressed steps to activate the package. The projected investments were first announced during President Al-Sisi’s visit to Qatar in April.
Shafick believes a cabinet reshuffle with a clear economic agenda could help speed up the reform process.
Rashad believes that there are some quick ways that can help Egypt boost productivity and sustain growth momentum. Advancing the digitisation of the economy, expanding fintech solutions, embedding digital tools in the public sector, and accelerating e-government services are crucial, he said.
At the same time, supporting firms in adopting smart work models and providing the necessary infrastructure for them, as well as addressing the persistent gaps in the business environment is essential, he added.
Equally important is expanding compensatory measures to address poverty to prevent a vicious circle that erodes human capital and undermines long-term growth prospects, Rashad stressed.
* A version of this article appears in print in the 4 September, 2025 edition of Al-Ahram Weekly
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