February 25, 2026
PRESS OFFICER: Angham Al Shami
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Washington, DC: The Executive Board of the IMF has completed the combined fifth and sixth reviews of Egypt’s economic reform program supported by the EFF arrangement and the first review under the RSF arrangement. 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, bringing 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.
Egypt’s macroeconomic conditions have improved as stabilization policies took hold. A broad-based economic recovery has lifted real GDP growth to 4.4 percent in FY2024/25 while inflation declined markedly to 11.9 percent in January 2026, supported by tight monetary and fiscal policies. The current account deficit narrowed further to 4.2 percent of GDP, reflecting strong remittances and tourism receipts, while market confidence continued to improve, as evidenced by successful external issuances, foreign direct investment inflows, and record nonresident inflows into domestic debt markets. The improved external position, together with exchange rate flexibility, has helped increase gross reserves from US$54.9 billion in December 2024 to about US$ 59.2 billion as of December 2025. Fiscal performance also improved, supported by lower public investment and higher tax revenue, although the primary balance fell short of the program target in the absence of the programmed divestment proceeds.
Implementation under the RSF—which supports reforms to accelerate decarbonization, strengthen environmental risk management, and enhance climate resilience—is progressing well. The authorities have completed two key reform measures, including publication of an implementation schedule for renewable energy targets and issuance of a directive requiring banks to monitor and report exposure to climate transition risks.
While macroeconomic stabilization has become more entrenched, progress on structural reforms under the program has been uneven. Efforts to reduce the state’s footprint, particularly progress on the divestment agenda, have been slower than envisaged, while high public debt and elevated gross financing needs continue to constrain fiscal space and weigh on medium-term growth prospects.
Looking ahead, Egypt’s priority is to transition toward a more sustainable, private sector-led growth model. The National Narrative for Economic Development provides an important framework to enhance competitiveness and strengthen private sector participation, but reform needs to accelerate—particularly through a reduced state footprint, including divestment, and a more level playing field. Policy priorities include maintaining exchange rate flexibility, completing disinflation, strengthening domestic revenue mobilization, and implementing a comprehensive debt management strategy while enhancing social spending and measures to protect the most vulnerable. Continued progress in state-owned enterprise and bank governance reforms, alongside the climate agenda, will be essential to support resilient, inclusive, and durable growth.
At the same time, downside risks remain significant, particularly those associated with heightened regional geopolitical tensions and tighter global financial conditions, as well as delayed implementation in energy sector and structural reforms. On the upside, a faster pickup in the Suez Canal activity or rebound in hydrocarbon production could support growth and strengthen the fiscal and external positions. Gulf-backed mega projects announced in recent years pose upside risks to FDI projections.
At the conclusion of the Executive Board’s discussion, Mr. Nigel Clarke, Deputy Managing Director and Chair made the following statement:
“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.
“However, further progress on deeper reforms, particularly in divestment in non-strategic sectors and debt management, is needed to reduce risks to attaining key program objectives. Further progress in these areas will be essential to crowd in private investment, reduce financing needs, and generate more inclusive and sustained growth over the medium term.
“Strengthening fiscal sustainability requires sustained domestic revenue mobilization alongside a comprehensive debt management strategy. Key priorities include broadening the tax base by reducing exemptions—particularly in the VAT—and strengthening tax compliance to create space for priority development and social objectives. In this context, full implementation of the tax measures recently approved by Cabinet will be critical to achieving program objectives. Maintaining debt sustainability also requires the 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, and faster progress on divestment.
“Maintaining a flexible exchange rate regime is critical to avoiding the reemergence of external imbalances. Exchange rate movements should continue to be market-determined, with FX intervention undertaken solely by the Central Bank of Egypt (CBE) in a transparent manner and limited to addressing disorderly market conditions. To enhance resilience to external shocks, and in line with program commitments, the CBE should continue to strengthen external buffers.
“Reinforcing governance and competition in the banking sector remains a key financial sector policy priority. Risk management practices at state-owned banks need to be strengthened rapidly, in line with the recent assessment of policies, procedures, and controls of state-owned banks.
“To foster resilience and support dynamic, inclusive, and export-led growth, decisive efforts to reduce the state’s footprint in the economy will be essential. While rapid progress in trade facilitation, digitalization, and business climate reforms is expected to yield positive growth effects, their impact will remain limited without tangible progress on divestment. Meanwhile, continued implementation of macro-critical climate reforms will further enhance economic resilience.”
