IMF reaches staff-level deal on Egypt’s seventh review, unlocking $1.6 bln
The International Monetary Fund (IMF) said it had reached a staff-level agreement with Egypt on the seventh review of its $8 billion support programme. The step could unlock about $1.64 billion in fresh financing as Cairo presses ahead with fiscal and structural reforms.
The agreement, announced late on Monday, covers Egypt’s Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF). Subject to IMF Executive Board approval, Egypt would receive about $1.5 billion under the EFF and $136 million under the RSF, bringing total disbursements under both arrangements to $7.2 billion.
The IMF said Egypt’s economy had remained resilient despite fallout from the war in the Middle East, helped by what it described as “timely and decisive” policy measures, including fuel and electricity price hikes, spending reprioritisation and expanded social support.
Economic growth accelerated to 5% in the third quarter of the fiscal year, bringing growth for the first nine months to 5.2%, the Fund said, underscoring a recovery in domestic activity despite heightened regional tensions.
Still, the Washington-based lender warned that risks remain elevated.
“Renewed global inflationary pressures or regional tensions could weigh on growth, tighten financial conditions, and place substantial pressure on the external position,” the IMF said, while noting that the recent U.S.-Iran ceasefire could improve investor sentiment and ease pressure from energy prices.
Egypt’s fiscal performance remained strong, with the government exceeding its primary surplus and tax revenue targets by end-March, supported by stronger domestic revenue mobilisation and spending discipline.
The IMF projected Egypt’s primary surplus to rise to 5% of gross domestic product in the 2026/27 fiscal year from 4.8% in 2025/26, saying sustaining the effort would be key to putting public debt on a firm downward path.
The Fund also praised Egypt’s efforts to widen the tax base and improve tax administration, with the tax-to-GDP ratio expected to rise by 1.2 percentage points this year.
But it said further steps were needed to expand social safety nets and protect low-income households from the impact of economic adjustments.
Inflation remains a challenge, with annual urban consumer inflation at 14.6% in May and projected to rise to 15.8% by the end of the fiscal year, driven by higher energy prices and the pass-through from currency depreciation.
The IMF said tight monetary policy would remain necessary to contain price pressures, while stressing that exchange rate flexibility should continue to serve as Egypt’s first line of defence against external shocks.
It also urged faster progress on structural reforms, particularly improving the business environment and reducing the state’s role in the economy, saying swift implementation of Egypt’s newly published State Ownership Policy and an accelerated divestment programme would be critical to supporting private-sector growth and job creation.
Separately, the IMF said Egypt had made progress under its climate-focused RSF programme, including integrating climate risks into public investment planning and mobilising private climate finance.