The IMF Executive Board completed the seventh review under Egypt’s Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF), allowing authorities to draw about $1.5 billion under the EFF and $272 million under the RSF.
The latest approval brings total purchases and disbursements under the two arrangements to about $7.3 billion.
The IMF said Egypt entered the period of war in the Middle East from a stronger macroeconomic position than during previous external shocks, supported by robust growth, lower inflation and rising gross international reserves.
Economic growth reached 5% in the third quarter of the 2025/26 financial year, taking growth over the first nine months to 5.2%. The IMF expects growth of about 4.6% for the full year.
Inflation declined until March, when it rose to 15.2% because of exchange rate depreciation and higher energy prices. Headline inflation later eased to 14.3% in June, while core inflation also stood at 14.3%.
The current account came under pressure from higher oil and gas prices, but record remittances, strong tourism receipts and a gradual recovery in Suez Canal revenues helped contain the impact. The current account deficit is estimated at 4.5% of gross domestic product (GDP) in 2025/26.
Fiscal performance remained strong, with the primary balance and tax revenue targets exceeded by the end of March. Gross financing needs declined by 5% of GDP in 2025/26. The tax-to-GDP ratio is expected to rise by 1.2 percentage points, while the primary surplus is projected to increase from 4.8% of GDP to 5% in 2026/27.
IMF Deputy Managing Director Nigel Clarke said Egypt’s policy response helped limit the effect of the regional shock. “Egypt entered the period of the war in the Middle East from a solid macroeconomic position, reflecting substantial progress in restoring stability and rebuilding buffers under the Fund-supported program,” Clarke said.
Clarke added that exchange rate flexibility, energy price adjustments and targeted support helped contain the impact.
However, the IMF warned that vulnerabilities remain, including high public debt, large financing needs and a significant state role in the economy. “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.
The IMF said reform progress has been uneven. Egypt has adopted a State Ownership Policy and improved customs and tax administration, but divestment and efforts to reduce the state’s economic footprint have moved more slowly than expected.
Recent divestment proceeds have reached about $520 million.
The IMF expects growth to slow to 4.4% in 2026/27 because of weaker investment, higher costs and uncertainty linked to the war. Inflation is expected to rise to 16.7% in the second half of 2026 before easing later.
Clarke said Egypt should maintain tight monetary policy, exchange rate flexibility, fiscal consolidation and faster structural reforms to support private sector-led growth and strengthen resilience.
–ChannelAfrica–
