RIYADH: Egypt reached a staff-level agreement with the International Monetary Fund that could unlock another $1.64 billion in funding, taking total program disbursements to about $7.2 billion.
The agreement covers the seventh review under the Extended Fund Facility and the second review under the Resilience and Sustainability Facility. Once approved by the IMF Executive Board, Egypt will receive approximately $1.5 billion under the EFF and an additional $136 million under the RSF, according to an IMF statement.
The agreement comes as Egypt continues implementing an IMF-backed reform program focused on restoring macroeconomic stability, strengthening public finances, and expanding private sector participation.
Earlier in June, Prime Minister Mostafa Madbouly said the government does not expect to need a new IMF financing program after the current arrangement expires in December, adding that discussions with the fund were progressing well despite the impact of regional geopolitical tensions.
In its latest release, the IMF said: “The impact of the war in the Middle East on the Egyptian economy has remained relatively contained, supported by the authorities’ timely and decisive policy actions, including fuel and electricity price adjustments, as well as rationalizing energy consumption by government entities and reprioritizing spending to alleviate external and fiscal pressures, together with increasing social spending to mitigate the impact on the vulnerable.”
It added: “Real gross domestic product growth reached 5 percent in the third quarter, bringing growth for the first three quarters of the fiscal year to 5.2 percent. Headline inflation increased, and the current account deficit widened slightly, reflecting a higher import bill.”
The IMF added that Egypt’s flexible exchange rate had continued to absorb the impact of substantial portfolio outflows, helping keep gross international reserves broadly stable at the end of March 2026. It said portfolio inflows had since resumed following the announcement of the US-Iran agreement, reversing most of the currency depreciation recorded after the regional conflict escalated.
The fund said downside risks persist, warning that renewed global inflation or heightened regional tensions could weaken growth, tighten financial conditions, and strain Egypt’s external position. It added that the recent US-Iran ceasefire agreement could instead ease energy price pressures, improve market sentiment, and help attract stronger inflows.
The IMF also noted that Egypt’s fiscal performance remained strong, with primary balance and tax revenue targets surpassed by the end of March 2026, supported by robust revenue collection and spending within budget.
It expects the primary surplus to rise from 4.8 percent of GDP in fiscal year 2025-26 to 5 percent in 2026-27, while emphasizing the need for continued fiscal discipline to reduce public debt and manage risks from government guarantees.
The government has aligned its 2026-27 budget with its reform agenda, targeting economic growth of 5.4 percent while introducing new tax, customs, and investment incentives aimed at attracting domestic and foreign investment.
The budget also increases support for health care and education and allocates 90 billion Egyptian pounds ($1.82 billion) to programs supporting exports, manufacturing, and entrepreneurship as Egypt seeks to strengthen private sector-led growth.
