IMF headquarters. Photo: AFP
The decision unlocks approximately $1.77 billion in fresh financing while urging faster structural reforms to strengthen private sector-led growth, the Fund announced.
The approval enables Egypt to immediately access SDR 1.11 billion (around $1.5 billion) under the EFF and SDR 200 million (around $272 million) under the RSF, bringing total IMF disbursements under the two programmes to approximately SDR 5.4 billion ($7.3 billion).
The Fund said Egypt had weathered the economic fallout from the war in the Middle East from a much stronger macroeconomic position than during previous external shocks, crediting the authorities’ policy response, including exchange rate flexibility, energy price adjustments, and fiscal restraint, with containing the impact on the economy.
The IMF noted that economic activity continued to strengthen, with real GDP growth accelerating to five percent in the third quarter of FY2025/2026, which ended at the end of June 2025, bringing growth in the first nine months of the fiscal year to 5.2 percent. As a result, Egypt’s economy is expected to expand by around 4.6 percent in FY2025/2026, only slightly below previous projections.
While inflation eased from earlier highs, the Fund said price pressures remain elevated. Annual headline inflation rose to 15.2 percent in March due to currency depreciation and higher energy prices before easing to 14.3 percent in June, while core inflation remained persistent.
The IMF also highlighted the resilience of Egypt’s external position despite higher global energy prices. Although the current account came under pressure, record remittance inflows, strong tourism revenues and a gradual recovery in Suez Canal receipts helped limit the current account deficit to an estimated 4.5 percent of GDP in FY202520/26. Gross international reserves also remained strong, reaching 119 percent of the IMF’s reserve adequacy metric by the end of June.
On public finances, the Fund said fiscal performance remained robust, with both primary surplus and tax revenue targets exceeded by end-March 2026. Egypt is projected to increase its tax-to-GDP ratio by 1.2 percentage points in FY2025/2026, while the primary surplus is expected to rise from 4.8 percent of GDP to five percent in the current FY2026/2027.
However, the IMF said implementation of structural reforms had been uneven and called for faster progress in reducing the state’s footprint in the economy. While welcoming Egypt’s State Ownership Policy and recent measures to improve customs and tax administration, the Fund said the government’s divestment programme had advanced more slowly than expected, despite the recent completion of the Gabal El-Zeit transaction and the sale of stakes in listed state-owned companies that raised around $520 million.
Looking ahead, the IMF projected Egypt’s economic growth to moderate to 4.4 percent in FY202620/27 as the lagged effects of regional conflict continue to weigh on investment and business confidence. Inflation is expected to rise again in the second half of 2026 before gradually returning toward the Central Bank of Egypt’s target range, while the current account deficit is forecast to narrow as oil prices ease and services exports and remittances remain strong.
The Fund warned that renewed regional tensions remain the biggest downside risk to the outlook, alongside Egypt’s elevated public debt, large financing needs and slow pace of structural reforms. Conversely, improved regional stability, a stronger recovery in Suez Canal traffic and faster implementation of reforms could support higher growth.
Deputy Managing Director and Acting Chair Nigel Clarke said Egypt had entered the regional conflict from a stronger macroeconomic position following significant progress under the IMF-supported programme.
“Continued fiscal discipline and accelerating structural reforms, notably decisive implementation of the State Ownership Policy and divestment agenda, will be essential to preserve macroeconomic stability and strengthen resilience,” Clarke said.
He also stressed the importance of maintaining a sufficiently tight monetary policy, preserving exchange rate flexibility, rebuilding international reserves, advancing fiscal consolidation and accelerating reforms aimed at reducing the state’s role in the economy to create more space for private sector investment.
The IMF's EFF programme is scheduled to conclude by mid-December this year.
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