IMF Unlocks $1.8Bn for Egypt After Seventh Program Review

RIYADH: Egypt gained immediate access to about $1.8 billion in International Monetary Fund financing after the fund’s executive board completed the latest reviews of the country’s economic reform arrangements. 

The decision allows Egypt to draw about $1.5 billion under the Extended Fund Facility and $272 million under the Resilience and Sustainability Facility, bringing total purchases and disbursements under the two arrangements to approximately $7.3 billion. 

The latest financing comes as Egypt continues to implement an IMF-backed economic reform program aimed at restoring macroeconomic stability, reducing public debt and reducing the state’s economic footprint to create more space for private-sector investment. 

The IMF said that exchange-rate flexibility, fiscal consolidation and energy-sector reforms helped improve the country’s external position, while progress on reducing the state’s economic footprint and advancing divestments has remained slower than planned. 

The IMF said exchange-rate flexibility, energy price adjustments and spending controls helped cushion the economic impact of the war in the Middle East. 

Nigel Clarke, IMF deputy managing director and acting chair, said: “However, important vulnerabilities remain, reflecting elevated public debt, large gross financing needs, and a sizable state footprint.”  

Economic performance 

Real gross domestic product grew by 5 percent in the third quarter of fiscal year 2025/2026, bringing growth over the first nine months to 5.2 percent. The IMF expects full-year growth of 4.6 percent. 

Annual urban headline inflation eased to 14.3 percent in June after reaching 15.2 percent in March, while core inflation rose to 14.3 percent.

 Central Bank of Egypt data showed headline inflation declined from 14.6 percent in May, while core inflation increased from 13.8 percent. 

The current account deficit is estimated at 4.5 percent of gross domestic product in 2025/2026. Record remittances, tourism receipts and a gradual recovery in Suez Canal revenues helped offset pressure from higher oil and gas prices. 

Gross international reserves reached 119 percent of the IMF’s adequacy metric by the end of June, the IMF said. 

Fiscal and reform pressures 

Egypt exceeded its primary balance and tax revenue targets by the end of March. The IMF expects the primary surplus to rise from 4.8 percent of GDP in 2025/2026 to 5 percent in 2026/2027. 

The World Bank forecasts 4.3 percent growth in 2025/2026. It said central government debt declined to 82.5 percent of GDP at the end of the previous fiscal year, although interest payments remained high at 10.6 percent. 

The IMF described structural reform progress as uneven, saying efforts to reduce the state’s economic role and accelerate divestments had moved more slowly than anticipated. Recent transactions, including the Gabal El Zeit deal, generated about $520 million. 

Outlook and risks 

The IMF expects growth to moderate to 4.4 percent in 2026/2027 as weaker investment, higher input costs and uncertainty weigh on activity. 

Inflation is forecast to rise to 16.7 percent in the second half of 2026. The fund said renewed regional escalation, elevated refinancing requirements and delays in reducing the state’s role in the economy remained key downside risks.