The International Monetary Fund says it had reached a staff-level agreement with Egypt on key programme reviews, endorsing the government’s macroeconomic stabilisation efforts while urging faster structural reforms to unlock private-sector-led growth.
An IMF mission and Egyptian authorities agreed on the fifth and sixth reviews under the Extended Fund Facility (EFF) and the first review under the Resilience and Sustainability Facility (RSF), the Washington-based lender said in a statement after talks in Cairo earlier this month.
The agreement, which is subject to approval by IMF management and the Executive Board, signals continued international backing for Egypt’s reform programme amid regional security tensions and global economic uncertainty.
“Stabilisation efforts have delivered important gains and the Egyptian economy is showing signs of robust growth,” said mission chief Ivanna Vladkova Hollar.
Economic activity picked up to 4.4 percent in the 2024/25 fiscal year, from 2.4 percent a year earlier, supported by non-oil manufacturing, transport, finance and tourism, the IMF said. Growth accelerated further to 5.3 percent year-on-year in the first quarter of 2025/26.
The IMF noted a marked improvement in Egypt’s balance of payments despite external headwinds. The current account deficit narrowed as remittances and tourism receipts remained strong, while non-oil exports recorded solid growth.
External financing conditions also eased in 2025, with non-resident holdings of local-currency government debt rising to about US$30 billion, while foreign exchange reserves climbed to US$56.9 billion, the Fund said.
Inflation, which surged after sharp currency devaluations and subsidy reforms in recent years, is now on a downward path, supported by tight monetary and fiscal policies. Headline urban inflation edged up slightly to 12.3 percent year-on-year in November after hitting a 40-month low in September, the IMF said.
“The Central Bank of Egypt has maintained an appropriately tight monetary policy stance, pursuing a cautious and gradual monetary easing to sustain disinflation efforts,” Vladkova Hollar said, warning that price pressures were “not yet firmly entrenched”.
On public finances, the IMF praised strong revenue performance but stressed the need to keep reducing debt. Egypt posted a primary budget surplus of 3.5 percent of gross domestic product in 2024/25, supported by tax revenues that grew 36 percent during the year and 35 percent in the first five months of the current fiscal year.
Despite the gains, Egypt’s tax-to-GDP ratio stood at just 12.2 percent in 2024/25, “modest by international standards”, the Fund said, calling for continued efforts to widen the tax base and streamline exemptions.
The authorities are targeting a primary surplus of 4.8 percent of GDP this fiscal year and 5 percent in 2026/27, the IMF said, adding that a package of “growth-friendly” tax reforms is expected to be approved in January 2026. The measures are projected to lift tax collections by about one percent of GDP next year.
The Fund also flagged risks linked to state-owned enterprises, including the Egyptian General Petroleum Corporation, while noting steps taken to improve cost recovery through fuel price indexation.
At the same time, the IMF urged Egypt to safeguard and expand social spending. Authorities reiterated their commitment to boost funding for the Takaful and Karama cash transfer programme and other targeted support for vulnerable groups.
With macroeconomic stability taking hold, the IMF said Egypt now needs to accelerate reforms to create space for the private sector.
“It is critical for Egypt to transition toward a more sustainable economic model,” Vladkova Hollar said, calling for faster divestment of state assets, levelling the playing field and avoiding the expansion of state-owned enterprises.
The IMF said reforms under the RSF, which focuses on climate resilience and sustainability, were broadly on track. Egypt has already published a timetable for meeting renewable energy targets and instructed banks to monitor exposure to climate-related transition risks, including those linked to the European Union’s carbon border adjustment mechanism.
The staff-level agreement clears the way for the IMF Executive Board to consider the combined reviews in the coming weeks, potentially unlocking the next tranche of funding under Egypt’s multi-billion-dollar IMF programme.
The Fund said it “expressed its gratitude to the Egyptian authorities for the constructive discussions”, while underscoring that sustained reform momentum would be essential to secure durable growth and economic resilience.
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