‘Not Now’: Egypt’s Balancing Act between the IMF and Its People

Economic pain has a threshold. Prudent governments understand that the difference between hardship a population can endure and pressure that risks provoking a backlash lies not in the size of any single price increase, but in the speed and accumulation of successive blows.

A price shock every few years may be manageable; successive rounds of increases within months can exhaust consumers’ capacity to cope, even when each measure makes economic sense on paper.

Egypt has been testing that threshold. A sharp depreciation of the pound has been followed by repeated increases in the cost of living, concentrating years of economic adjustment into a relatively short period. The result is an economy in which households have had little time to recover between shocks—and in which the scope for imposing further burdens appears increasingly limited. Any additional adjustment will be harder to sustain without a meaningful rise in incomes, an expansion of the state’s resources, or both.

Fuel prices illustrate the scale of the challenge. In 2011, a litre of 80-octane petrol cost about 90 piastres, while 92-octane petrol sold for 1.85 pounds, 95-octane petrol for 2.75 pounds, and diesel for 1.10 pounds. Today, 80-octane petrol costs 20.75 pounds a litre—more than 20 times its 2011 price. The price of 92-octane petrol has climbed to 22.25 pounds, roughly 12 times its former level, while diesel has reached 20.50 pounds, an increase of more than 18-fold. The pace of the increases is as significant as their cumulative scale: the price of 80-octane petrol alone has risen by seven pounds in less than a year.

Egypt has therefore reached a point at which pricing decisions must be handled with extreme caution. Prices are no longer merely one economic issue among many. Without a solution that accounts for their broader impact, they could become the country’s central economic and political problem.

That is the perspective from which the latest decision should be understood.

On 15 October 2026, Egypt’s automatic pricing committee decided to keep petrol and diesel prices unchanged until the end of December. On the surface, the move may look like a routine administrative decision. In its timing and substance, however, it carries a much broader message about economic policy: Cairo still has the power to say “not now”, even when the weight of external calculations is pushing it towards “yes”.

A freeze against the economic tide

The decision came despite pressures that might otherwise have favoured an increase. Brent crude traded above $100 a barrel on several days in September, reaching about $105.67 on 25 September before climbing towards $110 in mid-October, as war spread from Yemen towards the Strait of Hormuz.

Egypt’s fuel-pricing formula assigns an 80% weight to Brent prices and the exchange rate, meaning a strict application of the formula would almost certainly have resulted in higher prices. Yet the government chose to hold them steady.

More significant still, the decision came as the International Monetary Fund (IMF) was explicitly pressing Egypt to raise energy prices at least twice before the end of the year, with the aim of bringing fuel and electricity tariffs into line with their economic cost. The timing was notable: the decision coincided with the week of the IMF and World Bank annual meetings in Bangkok and came just weeks before an IMF mission was expected to conduct the eighth and final review of Egypt’s programme.

Had the government treated the Fund’s recommendations as binding deadlines, this would have been an opportune moment to implement them. It did not.

Lessons from history

Past crises illustrate the risks of poorly timed or inadequately supported reforms.

Austerity programmes and subsidy cuts implemented under agreements with the IMF have been associated with major social crises in several countries.

Egypt itself experienced this in January 1977, when widespread protests erupted after the government raised prices of essential commodities under arrangements with the Fund. The government reversed the decision within days.

In Indonesia in 1998, fuel-price increases introduced under an IMF programme amid a severe economic crisis helped ignite protests.

Argentina’s economy collapsed in 2001 after years of IMF-backed programmes, culminating in one of the largest sovereign defaults in modern history. In Jordan in 2018, a proposed tax bill linked to an IMF programme triggered protests that brought down the government. In Ecuador in 2019, the removal of fuel subsidies under an agreement with the Fund sparked violent demonstrations that forced the government to retreat. In Kenya in 2024, the government was forced to withdraw a finance bill proposing tax increases after deadly protests.

None of this means the IMF alone was responsible for these crises. Each country had its own circumstances, domestic policy failures, and political pressures. But a common lesson emerges: when economic prescriptions are implemented without sufficient regard for society’s capacity to absorb the costs, or at a time that fails to account for prevailing conditions, fiscal reform can trigger a political and social crisis whose costs far exceed the savings it was intended to deliver.

These cases suggest that saying “not now” can sometimes be an act of sound judgment, not an attempt to evade reform.

A more mature relationship with the IMF

This does not mean Egypt is turning its back on the IMF or reneging on its commitments. Rather, it suggests that the relationship may be evolving to a point where external recommendations are no longer translated automatically into policy decisions, but weighed against other considerations—above all, the public’s capacity to absorb further economic pressure.

Prime Minister Moustafa Madbouly articulated this approach clearly when he said that the programmes implemented with the Fund were Egyptian national programmes and that the state itself had set their targets.

But where does this room for manoeuvre come from? Countries do not gain leverage with international institutions simply because they want it; they earn it through their track records. The government has cited its record of meeting external debt obligations as evidence of financial discipline. According to Egyptian bankers, the country has never been late in paying an instalment or interest due on its external debt. In 2024 alone, Cairo repaid about $38.7 billion in external debt, according to the prime minister.

World Bank data point to external debt obligations of around $38.65 billion over the nine months from April to the end of 2026. Egypt is proceeding with these repayments despite exceptionally difficult regional conditions. This discipline in meeting its obligations is a source of credibility—and one that gives the country greater scope to tell its creditors: “We will deliver, but on our own timetable.”

The same credibility appears to be reflected in international assessments of the economy.

During the very week Egypt froze fuel prices, Moody’s upgraded the country’s credit rating to B3 with a positive outlook. In its October World Economic Outlook report, the IMF raised its forecast for Egypt’s economic growth in the current financial year to 4.7%, from 4.4% in its July estimate.

The decision to hold prices steady, in other words, did not appear to unsettle markets or international institutions. Instead, it came amid a broader improvement in perceptions of the Egyptian economy.

This is precisely where the decision’s significance lies. A state that implements every recommendation on schedule, regardless of circumstances, risks becoming an executor rather than a partner. By contrast, a country that meets its financial obligations consistently, delivers growth figures recognised by the very institutions it works with, and retains the right to determine the timing of its policies is exercising genuine economic autonomy. Such autonomy is not merely a slogan; it is a direct consequence of financial discipline.

Preparing for the post-IMF era

The approaching end of Egypt’s current IMF programme gives this argument added weight. The programme is due to conclude in mid-December, while the government is putting a new, nationally designed economic programme expected to be announced by the end of October. It will set the country’s targets through 2030 and outline its longer-term vision to 2045.

From this perspective, the fuel-price freeze looks like an early rehearsal for the post-IMF period: an economic decision made in Cairo that balances the arithmetic of costs against society’s ability to bear them, without waiting for anyone else’s green light.

The decisive factor behind the decision is something no international institution can accurately measure from its offices alone: the structure of incomes in Egypt and the capacity of households to absorb further increases. The government raised fuel prices by between 15% and 20% last March, while electricity tariffs rose by as much as 91% for some consumer categories. The minimum monthly wage, meanwhile, increased by about 14%, from 7,000 to 8,000 Egyptian pounds, effective in July. Against this backdrop, another fuel-price increase within a few months would have pushed costs beyond what wages could reasonably keep pace with.

Sound economic policy is not simply about matching a formula on paper. It is about understanding the society to which that formula will be applied.

Inflation, interest rates, and the wider economic calculation

The decision was not driven solely by social considerations. It also reflected the broader macroeconomic picture.

Annual urban inflation eased to 13.9% in September, its lowest level since February, while the IMF itself had forecast that inflation would reach around 17% by September. The Central Bank of Egypt (CBE) is due to meet on 29 October, with markets watching for a possible interest-rate cut. Raising fuel prices at this point could have reignited inflation and narrowed the scope for monetary easing—a step that could, in turn, reduce the government’s debt-servicing burden.

The freeze can be viewed as an attempt to balance household pressures against macroeconomic risks. It can instead be understood as a decision about timing, designed to serve both.

The fiscal cost of saying ‘not now’

None of this means the decision comes without a price. Fairness requires acknowledging that clearly.

Egypt’s 2026/27 budget was built on an assumed oil price of $75 a barrel, while allocations for petroleum-product subsidies were reduced to about 15.8 billion pounds.

With oil approaching $110 a barrel, the gap between budget assumptions and market prices has widened considerably.

Industry experts estimate that every additional dollar in the oil price costs the budget between 3 billion and 4 billion pounds annually. If prices remain at current levels, the resulting gap could reach approximately 90 billion to 140 billion pounds over a full year.

The government is covering part of this shortfall through the contingency reserve included in the budget, equivalent to about 1.1% of GDP.

The IMF itself has warned that public debt remains high and debt-servicing costs continue to weigh on public finances. Economic autonomy does not remove these constraints; it means managing them according to national priorities and calculations.

January will be the real test

The real test of this approach, therefore, will not be the October decision alone, but what comes next. If the government has to raise fuel prices in January, the value of today’s decision will depend on how it handles the next step. Will increases be gradual, accompanied by social protection for the most vulnerable, and explained to the public with clear figures? Or will they come as a surprise?

Genuine autonomy is not simply the ability to postpone a difficult decision. It is the ability to make that decision when the time is right, and in a way that preserves public trust.

Economic independence is earned, not declared

Egypt’s fuel-price freeze is therefore much more than a number on a petrol station sign.

It signals that, after a decade of cooperation with the IMF, the country may have reached a point where it can distinguish between meeting a policy objective and submitting to an externally prescribed timetable. Egypt continues to service its debts on schedule and deliver growth figures recognised by international institutions, while retaining the right to judge when households can bear the next step.

That, ultimately, is the equation that should govern economic policy: decisions made in Cairo, with one eye on the numbers and the other on the people who must live with them.