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Arab Finance: The International Monetary Fund (IMF) and Egypt reached a staff-level agreement on the seventh review of the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF), according to a press release.
Amine Mati, IMF Mission Chief for Egypt, highlighted that the completion of the reviews would make available SDR 1.11 billion ($1.5 billion) under the EFF arrangement and SDR 100 million ($136 million) under the RSF arrangement, bringing total disbursements under the arrangements to about SDR 5.3 billion ($7.2 billion)
Mati highlighted: “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.”
He pointed out that the real gross domestic product (GDP) growth reached 5% in the third quarter (Q3), bringing growth for the first three quarters of the fiscal year to 5.2%.
The headline inflation increased, while the current account deficit widened slightly due to a higher import bill. However, the flexible exchange rate serves as a shock absorber to sizable portfolio outflows, helping gross international reserves remain broadly stable at the end of March 2026.
Mati added that the recent recovery in portfolio inflows, supported by the announcement of the US-Iran agreement, has reversed most of the exchange rate depreciation recorded since the onset of the regional conflict.
“Downside risks persist. Renewed global inflationary pressures or regional tensions could weigh on growth, tighten financial conditions, and place substantial pressure on the external position. Conversely, the recent US-Iran ceasefire agreement could reduce pressures from global energy prices, improve investor sentiment, and support higher inflows to Egypt,” the official elaborated.
By the end of March 2026, Egypt exceeded its primary balance and tax revenue targets, reflecting strong domestic revenue mobilization and expenditures remaining within the allocated budget ceiling.
The IMF projects Egypt's primary surplus to increase from 4.8% of GDP in FY2025/2026 to 5% of GDP in FY2026/2027, emphasizing that sustaining this effort will be essential to placing public debt on a firm downward trajectory.
He affirmed: “Continued efforts will also be needed to contain fiscal risks, including those related to the large stock of government guarantees.”
Recently, IMF Communications Director Julie Kozack welcomed the country’s ongoing efforts to strengthen domestic revenue mobilization, saying it is essential for creating fiscal space to finance priority social and development spending.
In February, the IMF completed the combined fifth and sixth reviews of Egypt’s economic reform program, which unlocked about $2 billion under the EFF and $273 million under the RSF.
