Cairo: The Executive Board of the International Monetary Fund (IMF) has completed the seventh review under the 48-month Extended Arrangement under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF) arrangement for the Arab Republic of Egypt. The completion of these reviews allows Egyptian authorities to immediately draw approximately US$1.5 billion under the EFF and US$272 million under the RSF, bringing total disbursements to about US$7.3 billion.
According to International Monetary Fund, Egypt has shown resilience against the external pressures of the ongoing conflict in the Middle East, maintaining a stronger macroeconomic position than in past stress episodes. The country has experienced robust growth, declining inflation, and increasing gross international reserves, thanks to timely and decisive policy measures such as exchange rate flexibility and energy price adjustments. In the third quarter of the fiscal year 2025/26, real GDP growth reached 5%, contributing to a cumulative growth of 5.2% over the first nine months, with expectations to maintain approximately 4.6% growth for the fiscal year.
Despite challenges, Egypt's inflation dynamics have seen some improvement. After a spike in March 2026, inflation decreased to 14.3% by June. However, core inflation remained elevated. The current account faced pressure due to increased oil and gas prices, but this was offset by record remittance inflows and robust tourism revenues, narrowing the deficit to an estimated 4.5% of GDP. Strong fiscal performance was also noted, with revenue targets surpassed, and gross financing needs reduced by 5% of GDP.
Nevertheless, structural reform progress has been inconsistent. The State Ownership Policy represents a significant step in strengthening Egypt's state ownership framework, but efforts to reduce the state's economic role and encourage private sector investment have been slower than expected. The recent finalization of the Gabal El Zeit deal and other divestments brought in around $520 million, marking progress in this area.
Looking ahead, uncertainty remains a concern for Egypt's economic future. Projected growth may moderate due to the lingering effects of the regional conflict, while inflation is expected to rise in the latter half of 2026. Nevertheless, an improved trade balance and strong service sector performance are anticipated to narrow the current account deficit.
The IMF highlighted the importance of continued fiscal discipline and structural reforms to maintain macroeconomic stability. Accelerating the implementation of the State Ownership Policy and divestment agenda is deemed essential, alongside maintaining a tight monetary stance to manage inflation and build reserves. These efforts, coupled with better public financial management and broader revenue mobilization, are critical for Egypt's economic resilience and sustainable growth.