Frequently Asked Questions on Egypt and the IMF

The Egyptian economy continues to face significant macroeconomic challenges, compounded by regional instability and external shocks such as the conflict in Gaza and disruptions in Red Sea trade. Egypt has made substantial progress toward macroeconomic stability. Growth is strengthening, inflation is on a downward trend, and fiscal prudence—particularly through better oversight of public investment—is helping contain demand pressures. However, as stabilization takes root, the focus will need to shift toward accelerating and deepening structural reforms, including through reforms to level the playing field and implement the state ownership policy through decisive implementation of the divestment program.

Overall program objectives remain centered on four key goals to ensure macroeconomic stability and secure private-sector-led growth: 

Learn more about what we mean about foreign currency liberalization in this video.

The IMF-supported program considers that macroeconomic stabilization must be accompanied by measures that protect the most vulnerable and support the middle class. In the context of elevated inflation and a recalibrated fiscal consolidation path, the program prioritizes preserving space for critical social spending while advancing reforms that lay the foundation for inclusive, private-sector-led growth. To this end:

The authorities' policies to strengthen the private sector under the program are anchored by the State Ownership Policy (SOP). The SOP is an integrated package of objectives and policies to guide state ownership of assets and strengthen the role of the private sector in the economy. Decisive implementation of the SOP adopted in 2022 would help to establish the legal, regulatory, and competitive conditions that allow the private sector to become the primary driver of economic growth by significantly reducing the state presence, including military entities, in the economy, leveling the economic playing field between private and state economic agents, and creating a business and governance environment supportive of competitive markets.

Some reforms, such as removing special tax exemptions for SOEs have been initiated and need to be fully implemented, but the significant and largely opaque presence of SOEs, including in competitive sectors of the economy, creates uncertainty for potential private investors underlining the need to advance more forcefully with plans to divestment of SOEs from these sectors and further improve overall transparency of SOE operations. Complementing this, efforts to strengthen the independence of the Egyptian Competition Authority, streamline procedures companies face when investing in Egypt including those related to land acquisition, facilitate trade, and to further improve governance and anticorruption measures will be important in creating an attractive business environment that supports growth.

To help Egypt raise more public revenue and ensure adequate funding for priority development and social needs, the authorities are introducing a set of tax policy and administration reforms aimed at improving efficiency, fairness, and transparency:

Both tourism and Suez Canal receipts are important sources of foreign exchange for Egypt. Tourism receipts reached US$13.6bn during FY 2022/23 and Suez Canal current account receipts averaged over US$700 million per month prior to the disruptions in the Red Sea.

Despite some moderation, tourism is holding up reasonably well in challenging circumstances.

However, Red Sea disruptions are impacting foreign exchange flows, could deter tourism, and through their impact on trade could result in shortages and add to inflationary pressures. Suez Canal receipts declined by US$6 billion in 2024 relative to 2023 and remained depressed in the first five months of 2025.

The economic strategy under the program is focused on reducing Egypt's debt by putting the general government debt-to-GDP ratio on a downward path. This is expected to be achieved through continued fiscal discipline, while ensuring adequate social protection spending, and use of divestment proceeds.

More revenue mobilization will be key to help support this effort as it will help creating space for priority spending and for targeted support for the vulnerable.  Proceeds from the ongoing state asset divestment program will help reduce public debt further. 

The IMF-supported program has a number of measures to promote greater fiscal transparency. Transparency helps governments obtain an accurate picture of their finances when making economic decisions, including of the costs and benefits of policy changes and potential risks to public finances. It also provides legislatures, markets, and the public with the information they need to hold governments accountable. Greater fiscal transparency can also help strengthen the credibility of a country’s fiscal plans and can help underpin market confidence and market perceptions of fiscal solvency. The authorities have committed to a significant number of concrete measures in this area, including:

Subsidies are intended to keep prices low for all consumers, but they come at a substantial cost and are not a good use of scarce public resources. General subsidies are not well targeted at the poor (often benefiting higher income households more), have sizable fiscal consequences (leading to higher taxes/borrowing or lower non-subsidy spending to finance subsidies), promote inefficient allocation of an economy’s resources (hindering growth), and encourage pollution (contributing to climate change and premature deaths from local air pollution). Fossil fuel subsidy removal would also reduce energy security concerns related to volatile fossil fuel supplies.

Energy subsidies have increased in recent years as retail energy prices have not kept up with the increase in the cost of energy production. Ensuring the gradual, transparent, and full increase in retail fuel and electricity prices is important to prevent the reemergence of large untargeted subsidies and create much-needed fiscal space for enhancing social transfers targeted to the vulnerable groups. In addition, energy prices that reflect the cost of production can be supportive of investment in Egypt’s energy sector to meet increasing energy demand and thereby avoid electricity shortages.

The IMF staff conducted a mission to Cairo in May 2025 and noted continued progress under Egypt’s macroeconomic reform program, including improvements in inflation and foreign exchange reserves. However, additional time is needed to finalize key policy measures—particularly those related to reducing the state’s role in the economy, by advancing the implementation of the State Ownership Policy, and leveling the playing field.

To allow for this continued work and ensure alignment with the program’s core objectives, the Fifth and Sixth Reviews under the Extended Fund Facility (EFF) will be combined and are expected to be completed in the fall. The IMF remains committed to supporting Egypt in advancing reforms that strengthen resilience and foster inclusive, private-sector-led growth.

Egypt faces growing climate-related risks—rising temperatures, water scarcity, and more frequent extreme weather—that threaten long-term economic and financial stability. These structural vulnerabilities require sustained investment and policy reform.

The Resilience and Sustainability Facility (RSF) provides Egypt with affordable, long-term financing to support its climate transition. The RSF arrangement backs the country’s National Climate Change Strategy 2050 and updated Nationally Determined Contributions (NDCs), and is designed to: