IMF Executive Board Completes the Fifth and Sixth Reviews Under the Extended Arrangement Under the Extended Fund Facility and First Review Under the Resilience and Sustainability Arrangement for Egypt
IMF News, February 26, 2026
Source details
- Canonical URL
- IMF Executive Board Completes the Fifth and Sixth Reviews Under the Extended Arrangement Under the Extended Fund Facility and First Review Under the Resilience and Sustainability Arrangement for Egypt
Other formats
Bibliographic details
- Published: February 26, 2026
Executive Board decision and financial disbursements
- The Executive Board completed the combined fifth and sixth reviews of Egypt’s Extended Fund Facility (EFF) arrangement and the first review under the Resilience and Sustainability Facility (RSF).
- This enables the authorities to immediately draw:
- about US$2 billion (SDR 1465.44 million) under the EFF, and
- US$ 273 million (SDR 200 million) under the RSF.
- These purchases bring Egypt’s total purchases under the EFF and RSF to about US$ 5,207 million (SDR 3,885.7 million or 190.7 percent of quota).
- Egypt’s 46-month EFF arrangement that was approved on December 16, 2022, has been extended through December 15, 2026.
Macroeconomic developments and recent performance
- “Egypt’s macroeconomic conditions have improved as stabilization policies took hold.”
- Key recent outcomes:
- Real GDP growth: 4.4 percent in FY2024/25.
- Inflation: 11.9 percent in January 2026.
- Current account deficit: narrowed to 4.2 percent of GDP.
- Gross reserves: increased from US$54.9 billion in December 2024 to about US$ 59.2 billion as of December 2025.
- Drivers of improvement:
- Tight monetary and fiscal policies.
- Exchange rate flexibility.
- Strong remittances and tourism receipts.
- Successful external issuances, foreign direct investment inflows, and record nonresident inflows into domestic debt markets.
- Fiscal performance:
- Improved, supported by lower public investment and higher tax revenue.
- The primary balance fell short of the program target in the absence of the programmed divestment proceeds.
Structural reforms and RSF implementation
- Progress on deeper structural reforms has been uneven; accelerating implementation remains critical to securing durable, private-sector-led and inclusive growth.
- RSF implementation progress:
- Two key reform measures completed:
- Publication of an implementation schedule for renewable energy targets.
- Issuance of a directive requiring banks to monitor and report exposure to climate transition risks.
- Areas of slower progress:
- Reducing the state’s economic footprint, particularly progress on the divestment agenda.
- State-owned enterprise and bank governance reforms need continued advancement.
Risks, upside scenarios, and outlook
- Downside risks:
- Heightened regional geopolitical tensions.
- Tighter global financial conditions.
- Delayed implementation in energy sector and structural reforms.
- Upside risks:
- Faster pickup in Suez Canal activity.
- Rebound in hydrocarbon production.
- Gulf-backed mega projects announced in recent years posing upside risks to FDI projections.
- Medium-term constraint:
- High public debt and elevated gross financing needs continue to constrain fiscal space and weigh on medium-term growth prospects.
IMF assessment and policy recommendations (excerpted from Chair statement)
- IMF Chair (Mr. Nigel Clarke) summary points:
- “The authorities’ stabilization measures continue to take effect. Economic growth is picking up; tight monetary policy has helped reduce inflation; and the external position has improved, supported by exchange rate flexibility and foreign inflows. Fiscal consolidation, including through slower public investment and lower subsidies, has contained demand pressures and reduced debt ratios.”
- Further actions needed:
- Accelerate deeper reforms, particularly divestment in non-strategic sectors and debt management, to reduce risks to attaining key program objectives.
- Strengthen fiscal sustainability via:
- Sustained domestic revenue mobilization.
- A comprehensive debt management strategy.
- Key priorities for revenue and fiscal policy:
- Broadening the tax base by reducing exemptions—particularly in the VAT.
- Strengthening tax compliance.
- Full implementation of the tax measures recently approved by Cabinet.
- Debt sustainability measures:
- Implementation of a medium-term debt strategy.
- Further development of the domestic debt market.
- Greater transparency in fiscal operations.
- Tighter oversight of off-budget entities.
- Faster progress on divestment.
- Exchange rate policy:
- Maintain a flexible exchange rate regime; exchange rate movements should continue to be market-determined.
- FX intervention should be undertaken solely by the Central Bank of Egypt (CBE) in a transparent manner and limited to addressing disorderly market conditions.
- CBE should continue to strengthen external buffers.
- Financial sector and banking governance:
- Reinforce governance and competition in the banking sector.
- Rapidly strengthen risk management practices at state-owned banks, in line with the recent assessment of policies, procedures, and controls.
- Structural and climate-related reforms:
- Decisive efforts to reduce the state’s footprint in the economy are essential to crowd in private investment.
- Continue implementation of macro-critical climate reforms to enhance economic resilience.
- Trade facilitation, digitalization, and business climate reforms expected to yield positive growth effects but require tangible progress on divestment to have full impact.
- Social protection:
- Enhance social spending and measures to protect the most vulnerable while implementing fiscal reforms.
Key statistics and program facts (exact figures as reported)
- Immediate disbursements enabled:
- US$2 billion (SDR 1465.44 million) under the EFF.
- US$ 273 million (SDR 200 million) under the RSF.
- Total purchases under EFF and RSF: about US$ 5,207 million (SDR 3,885.7 million or 190.7 percent of quota).
- EFF arrangement length: 46-months; approved December 16, 2022; extended through December 15, 2026.
- Real GDP growth: 4.4 percent in FY2024/25.
- Inflation: 11.9 percent in January 2026.
- Current account deficit: 4.2 percent of GDP.
- Gross reserves: US$54.9 billion in December 2024; about US$ 59.2 billion as of December 2025.
Source: Press Release No. 26/064 — IMF (February 25, 2026).