The International Monetary Fund has paved the way for about $2.3 billion in fresh financing for Egypt following the completion of the fifth and sixth reviews of Egypt’s economic reform programme and the first review under its Resilience and Sustainability Facility.
The completion of the reviews enables Egypt to immediately draw roughly $2 billion under its 46-month Extended Fund Facility arrangement and an additional $273 million under the climate-focused Resilience and Sustainability Facility (RSF), IMF said.
Total disbursements under the two programmes now stand at about $5.2 billion.
Egypt’s IMF programme, originally approved in December 2022 for $3 billion, was expanded to $8 billion in March 2024 as the country battled soaring inflation and acute foreign currency shortages. The arrangement has now been extended through December 15, 2026.
IMF said Egypt’s macroeconomic conditions have improved as stabilisation policies gained traction. Real GDP growth accelerated to 4.4% in fiscal year 2024/25, while annual inflation slowed sharply to 11.9% in January 2026, supported by tight monetary and fiscal measures.
The current account deficit narrowed to 4.2% of GDP, buoyed by strong remittances and tourism revenues. Market sentiment strengthened, reflected in successful external bond issuances, rising foreign direct investment and record inflows by non-residents into domestic debt markets.
Forex reserves rise
Egypt’s foreign exchange reserves rose to about $59.2 billion in December 2025 from $54.9 billion a year earlier, aided by exchange rate flexibility and improved external conditions.
Fiscal performance showed signs of improvement, supported by higher tax revenues and lower public investment spending. However, the primary balance fell short of programme targets due to delays in planned state asset sales.
Under the RSF arrangement, which supports reforms aimed at accelerating decarbonisation and strengthening climate resilience, Egypt has completed key measures including publishing an implementation timetable for renewable energy targets and issuing guidance requiring banks to monitor and disclose exposure to climate transition risks.
Despite stronger macroeconomic stability, the IMF noted that progress on structural reforms has been uneven. Efforts to reduce the state’s role in the economy, particularly through divestment of state-owned assets, have lagged expectations. High public debt and substantial gross financing needs continue to limit fiscal space and weigh on medium-term growth prospects.
Reforms must accelerate
Looking ahead, Egypt’s priority is to transition toward a more sustainable, private sector-led growth model. The National Narrative for Economic Development provides an important framework to enhance competitiveness and strengthen private sector participation, but reform needs to accelerate — particularly through a reduced state footprint, including divestment, and a more level playing field, it said.
Policy priorities include maintaining exchange rate flexibility, completing disinflation, strengthening domestic revenue mobilisation, and implementing a comprehensive debt management strategy while enhancing social spending and measures to protect the most vulnerable. Continued progress in state-owned enterprise and bank governance reforms, alongside the climate agenda, will be essential to support resilient, inclusive, and durable growth, said the IMF. - TradeArabia News Service
