Egypt Secures $2.7 Billion IMF Funding After Key Reforms, Growth Surge

International Monetary Fund (IMF) staff and Egyptian authorities have reached a staff-level agreement on the fifth and sixth reviews under the Extended Fund Facility (EFF) and the first review under the Resilience and Sustainability Facility (RSF). This agreement paves the way for Egypt to access $2.7 billion in financing.

Ivanna Vladkova Hollar, the IMF’s mission chief for Egypt, stated in a Monday announcement that “economic stabilization efforts have yielded important gains, with the Egyptian economy showing signs of strong growth. This stability was achieved amidst a challenging regional security environment and heightened global uncertainty.”

The approval follows the IMF’s conditions for Egypt to implement reforms in its state-owned enterprise (SOE) divestment program and reduce fuel subsidies. These reforms were prerequisites for the disbursement of $2.5 billion for the fifth and sixth EFF reviews, in addition to the first tranche of $274 million under the Resilience and Sustainability Facility.

Egypt’s Economic Growth Trajectory

The IMF reported that Egypt’s economic activity grew by 4.4%, an increase from 2.4% in the preceding year. The Fund highlighted that “the broad-based recovery was supported by strong performance in non-oil manufacturing, transportation, the financial sector, and tourism.”

In March 2024, Egypt secured an agreement with the IMF to expand its support program from $3 billion to $8 billion. The Fund disbursed $1.2 billion last March following the completion of the fourth review of the Extended Fund Facility, bringing Cairo’s total receipts to $3.2 billion.

The Fund emphasizes that “as macroeconomic stabilization begins to take hold, it is critical for the country to transition towards a more sustainable economic model by accelerating reforms that provide space and opportunity for private sector growth.”

Reducing the State’s Economic Footprint

The IMF’s press statement recommended “accelerating efforts to reduce the state’s footprint, including making significant progress on the divestment agenda, and exerting additional efforts to ensure a level playing field, avoiding the creation or expansion of activities by state-owned enterprises and other economic entities.”

The lending institution commended Egypt’s fiscal performance, which saw a primary surplus of 3.5% of GDP in the 2024/2025 fiscal year. This was attributed to robust tax revenue performance, growing by 36% due to reforms aimed at broadening the tax base, improving voluntary compliance, and streamlining exemptions.

On monetary policy, the IMF observed that the Central Bank of Egypt (CBE) maintained an appropriately tight stance and urged continued caution to fully anchor disinflationary pressures. The Monetary Policy Committee is scheduled to convene on December 25 for its final meeting of the year to decide on deposit and lending rates, with market expectations pointing to a 100-basis-point cut in Egypt.

Urban inflation in Egypt edged up slightly to 12.3% year-on-year in November, after reaching a 40-month low in September. This trend was linked to strict fiscal and monetary policies, reduced foreign currency shortages, and the fading impact of previous exchange rate depreciation, according to IMF data.