The International Monetary Fund (IMF) has increased its growth expectations for Egypt’s economy for the current and next fiscal years by 0.2 percent, now projecting growth rates of 3.8 percent and 4.3 percent, respectively. This adjustment reflects an improvement from the January forecasts of 3.6 percent and 4.1 percent.
The Fund’s World Economic Outlook did not specify the rationale behind the increased growth expectations for Egypt, but projections indicate that the nation’s economy grew by 2.4 percent in 2024.
Egypt’s economic outlook improves
This adjustment comes as Egypt’s Minister of International Cooperation, Dr. Rania Al Mashat, expressed earlier this month her expectation that the economy would expand by 4 percent during the current fiscal year, ending on June 30, with growth anticipated to accelerate to 4.5 percent in the next fiscal year. Dr. Al Mashat also revealed that the country’s GDP at current prices is expected to reach EGP20.4 trillion ($399.8 billion) in the upcoming fiscal year. This forecast highlights the government’s commitment to stimulating economic growth despite various challenges.
Strong growth in manufacturing and tourism
In the second quarter of the current fiscal year, the Egyptian economy grew at its fastest quarterly pace in over two years, recording a growth rate of 4.3 percent, buoyed by the manufacturing and tourism sectors. This growth occurred despite a continued decline in Suez Canal revenues, which have been affected by trade tensions in the Red Sea. According to a statement from the Egyptian Ministry of Finance last week, the government estimates that the revenue losses from the Suez Canal amounted to EGP110 billion ($2.15 billion) during the nine months ending in March.
Read more: Egypt’s economic outlook sees GDP reaching $399.8 billion in upcoming fiscal year
Oil prices and economic challenges
Looking ahead, the Egyptian economy is expected to benefit from a decline in oil prices, which are currently trading at about $67 per barrel, given the country’s reliance on importing petroleum products. However, Egypt is grappling with a high ratio of public debt to gross domestic product, which reached 90.9 percent in the fiscal year ending June 30, 2024, according to the Fund’s report following consultations with the Egyptian government last March.
Last week, the Central Bank of Egypt (CBE) announced a significant reduction in key interest rates by 2.25 percent for the first time in four years. The overnight deposit rate, overnight lending rate, and main operation rate were each cut by 2.25 percentage points (225 basis points), now standing at 25 percent, 26 percent, and 25.5 percent, respectively. The discount rate was also lowered to 25.5 percent.
This rate cut comes amid heightened global economic uncertainty, with ongoing supply chain disruptions and declining oil prices raising concerns about the sustainability of global economic growth. These external factors have greatly influenced the Monetary Policy Committee’s (MPC) recent decision, as Egypt aims to shield its economy from adverse international conditions.
Resilience of Egypt’s domestic economy
Despite these global challenges, Egypt’s domestic economy has shown promising signs of resilience. Preliminary data suggest that GDP growth exceeded 4.3 percent in the fourth quarter of 2024, primarily driven by non-petroleum manufacturing sectors, trade, and tourism—three key pillars supporting the nation’s economic performance. A primary factor behind the rate cut is the notable decline in inflation, with annual headline inflation falling to 13.6 percent in March 2025, largely due to decreasing food prices. This easing trend has provided the CBE with the necessary room to lower interest rates without risking unchecked inflation.
Earlier in April, data from Egypt’s statistics agency, CAPMAS, revealed that the country’s annual urban consumer price inflation rose to 13.6 percent in March, up from 12.8 percent in February. The CBE recently reported a remarkable increase in net foreign assets within the Egyptian banking system, which rose by approximately $1.5 billion during February 2025. This increase brings the total to EGP515.856 billion ($10.17 billion), a notable rise from EGP437.261 billion ($8.7 billion) recorded in January.
Support from international financial institutions
According to a recent report from the CBE, the total foreign assets of the banking sector—including both the Central Bank and commercial banks—amounted to EGP3.653 trillion in February, compared to EGP3.579 trillion the previous month. During this period, foreign liabilities experienced a slight decline, decreasing to EGP3.137 trillion from EGP3.142 trillion. Last week, members of the European Parliament approved a proposal to provide Egypt with loans worth EUR4 billion ($4.3 billion). The EU Parliament adopted the macro-financial assistance to Egypt with 452 votes in favor, 182 against, and 40 abstentions. Additionally, the European Commission proposed support for Egypt on March 15, 2024, in the form of macro-financial assistance through loans amounting to up to EUR5 billion.
In March 2025, the IMF finalized its fourth review of Egypt’s economic reform program and approved a disbursement of $1.2 billion. Additionally, the IMF’s executive board granted Egypt’s request for an arrangement under the resilience and sustainability facility, allowing access to approximately $1.3 billion. The latest IMF disbursement under the extended fund facility (EFF) program raises Egypt’s total purchases under the EFF to about $3.207 billion, which is 119 percent of the quota. Egypt’s 46-month EFF arrangement received approval on December 16, 2022.
