The International Monetary Fund (IMF) said Monday it has reached a staff-level agreement with Egypt on the country’s seventh review under its Extended Fund Facility (EFF) programme and second review under the Resilience and Sustainability Facility (RSF).
Subject to approval by the IMF Executive Board, the agreement would unlock SDR 1.11 billion (US$1.5 billion) under the EFF arrangement and SDR 100 million (US$136 million) under the RSF programme.
The approval would bring total disbursements under the two programmes to about SDR 5.3 billion (US&7.2 billion), the IMF said.
The IMF mission, led by Mr Mati, held discussions with Egyptian authorities in Cairo from May 11 to 21 and continued talks virtually on economic and financial policies supporting the reviews.
The Fund said Egypt’s economy had remained resilient despite the external shock from the war in the Middle East, supported by government measures including fuel and electricity price adjustments, reduced energy consumption by public institutions, spending reprioritisation and increased social support.
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Egypt’s real GDP growth reached 5 percent in the third quarter, bringing growth for the first three quarters of the fiscal year to 5.2 percent according to the IMF.
However, the Fund warned that risks remain, including renewed global inflation pressures, regional tensions and tighter financial conditions that could affect growth and put pressure on Egypt’s external position.
The IMF said a recent US-Iran ceasefire agreement could help reduce global energy price pressures, improve investor sentiment and support stronger capital inflows into Egypt.
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Fiscal performance was described as strong, with Egypt exceeding primary balance and tax revenue targets by the end of March 2026. The IMF expects the country’s primary surplus to increase from 4.8 percent of GDP in fiscal year 2025/26 to 5 percent in 2026/27.
The Fund said sustaining fiscal discipline would be critical to placing public debt on a declining path and managing risks linked to government guarantees.
The IMF praised Egypt’s efforts to improve domestic revenue collection, saying tax reforms and better administration were expected to raise the tax-to-GDP ratio by 1.2 percentage points this year.
It said expanding the tax base was necessary to create fiscal space for social spending, while urging further development of targeted support programmes for vulnerable households.
Debt management remains a key priority, with the IMF backing Egypt’s plan to reduce gross financing needs by about 10 percent of GDP between fiscal years 2025/26 and 2026/27 through longer debt maturities, voluntary liability management operations and the use of divestment proceeds.
Inflation remains a challenge, with urban headline inflation reaching 14.6 percent in May and projected to rise to 15.8 percent by the end of the fiscal year, driven by higher energy prices, exchange rate pressures and base effects.
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The IMF recommended maintaining a tight monetary policy stance to contain inflation and prevent further price pressures following energy price adjustments.
The Fund also stressed the importance of exchange rate flexibility as Egypt’s main buffer against external shocks, particularly amid heightened geopolitical uncertainty.
On structural reforms, the IMF called for faster implementation of measures aimed at improving the business environment, increasing transparency and strengthening private-sector growth.
It highlighted the importance of implementing Egypt’s State Ownership Policy, published in June, including accelerating plans to reduce the state’s role in sectors where the government has committed to divest.
The IMF said progress was also being made under the Resilience and Sustainability Facility, including climate-focused public investment planning, climate risk analysis, private climate finance mobilisation and reforms addressing water management and emissions reduction.
The IMF Executive Board will consider the reviews after completion of the required procedures and submission of the final assessment.
