The International Monetary Fund completed the fourth review of Egypt’s economic reform program and approved $1.2 billion for disbursement.
The IMF’s executive board also approved Egypt’s request for an arrangement under the resilience and sustainability facility with access to about $1.3 billion, the lender said in a statement.
The latest disbursement under the extended fund facility (EFF) programme brings Egypt’s total purchases under the EFF to about $3.207 billion, 119 percent of quota.
Egypt’s 46-month EFF arrangement was approved on December 16, 2022.
Implementing key policies
The Egyptian authorities have continued to implement key policies to preserve macroeconomic stability, despite ongoing regional tensions that had caused a sharp decline in Suez Canal receipts.
While growth slowed to 2.4 percent in FY2023-24, down from 3.8 percent in the previous fiscal year, it recovered back to about 3.5 percent (year-on-year) in the first quarter of the current fiscal year (FY2024-25).
Read: IMF projects 3.3 percent global growth in 2025, inflation to fall to 3.5 percent by 2026
Inflation has trended downward since September 2023. During the same period (FY2023-24), the current account deficit widened to 5.4 percent of GDP, while the primary fiscal balance improved by 1 percentage point to 2.5 percent of GDP, due to tight expenditure controls that have more than offset domestic revenue underperformance.
“In light of the difficult external conditions, as well as the challenging domestic economic environment, the IMF executive board approved the authorities’ request to recalibrate the authorities’ medium-term fiscal commitments. In particular, the primary balance surplus (excluding divestment proceeds) is expected to reach 4 percent of GDP next fiscal year (FY2025-26) (half a percent of GDP less than earlier program commitments) and then increase to 5 percent of GDP in FY2026-27 (in line with earlier commitments),” the IMF said in a statement.
Challenges remain
The external environment is expected to remain challenging, as successive external shocks have continued and persisted, the IMF said.
“The ongoing war with Sudan precipitated a substantial influx of refugees, while trade disruptions in the Red Sea since December 2023 reduced foreign exchange inflows from the Suez Canal by $6 billion in 2024. At the same time, remittances from Egyptian workers overseas and tourism receipts have remained robust,” the statement added.
At the conclusion of the executive board’s discussion, Nigel Clarke, deputy managing director and chair, said: “Since March 2024, the authorities have made considerable progress in stabilizing the economy and rebuilding market confidence despite a challenging external environment marked by persistent and successive external shocks, including regional conflicts and trade disruptions in the Red Sea.”
