Cairo is bracing for a crucial engagement with the International Monetary Fund (IMF) as the Fund’s mission arrives in December to conduct the combined fifth and sixth reviews of Egypt’s $8 billion Extended Fund Facility (EFF) program, alongside the first review of the Resilience and Sustainability Facility (RSF).
The outcome of these deliberations will be pivotal in unlocking further tranches of IMF financing and signaling the trajectory of Egypt’s economic reform agenda.
At a recent press briefing, IMF Communications Director Julie Kozack confirmed the timing: “The mission for the Fifth and Sixth Reviews under the EFF and the First Review under the RSF is scheduled to take place in Cairo in early December.” She noted that Egypt’s macroeconomic outlook has shown signs of improvement, with growth strengthening, inflation easing since the start of the year, and fiscal discipline being preserved.
Economic context
Egypt entered the 46-month IMF program in March 2024 after grappling with a severe foreign currency crunch and surging inflation. Inflation peaked at 38 percent in September 2023, driven by global commodity shocks, supply chain disruptions, and successive devaluations of the Egyptian pound. Since then, inflationary pressures have moderated, with the government projecting a continued decline in December, attributing the trend to “current regional stability.”
Prime Minister Mostafa Madbouly, who recently represented Egypt at the G20 Summit in Johannesburg, emphasized the country’s progress in talks with IMF Managing Director Kristalina Georgieva. Discussions highlighted strengthening foreign reserves, rising private sector investment, and growth in productive sectors.
Cabinet spokesperson Mohamed ElHomsani echoed this optimism, pointing to improvements in major economic indicators, particularly the sustained decline in inflation and robust tax revenue performance. Egypt recorded its highest primary surplus on record in the first quarter of the 2025/2026 fiscal year, reaching EGP 179 billion—nearly double the surplus achieved in the same period last year.
Reform measures
Despite encouraging signals, Kozack cautioned that Egypt continues to face vulnerabilities, including a low tax-to-GDP ratio, elevated debt, high gross financing needs, energy-related fiscal risks, and a strong state footprint in the economy. She underscored recent steps taken by the authorities to address these challenges: “To provide forward-looking assurances in terms of the direction of policies, the authorities have made some recent efforts, and these include establishing a robust institutional framework around divestment of state assets. They’ve moved ahead with the independent assessment of corporate and risk governance frameworks for state-owned banks. And they’re working to step up efforts on debt management as the financing outlook improves for Egypt.”
Structural reforms remain central to the IMF program. The government has advanced divestment from select economic sectors, enhanced debt management, and bolstered financial transparency. Coordination with the Central Bank of Egypt to maintain a flexible exchange rate policy has also been reaffirmed. The floating of the Egyptian pound in March was one of the key conditions set by the IMF before approving loan disbursements.
Foreign investment and bilateral deals
Questions have arisen about the role of recent foreign investments, particularly Qatar’s $3.5 billion deal with Egypt. Kozack clarified the IMF’s position: “The deal is a bilateral agreement between the Egyptian authorities and the Qatari authorities. From our perspective at the IMF, there are a range of options for Egypt to increase foreign direct investment, including through divestment of stakes in state assets. What’s important under the program is that any of the proceeds from these divestments contribute to strengthening Egypt’s international reserves and to reducing public debt.”
This emphasis reflects the IMF’s broader goal of ensuring that external inflows bolster economic stability and create a more favorable environment for growth, ultimately improving living standards for Egyptians.
Climate and development agenda
Beyond fiscal and monetary reforms, Egypt has sought to align its economic program with climate and sustainability objectives. Minister of International Cooperation Rania Al-Mashat presented updates on the expansion of projects under the NWFE (Nexus of Water, Food, and Energy) platform, launched during COP27 in Sharm El-Sheikh. The initiative aims to accelerate Egypt’s climate agenda while mobilizing concessional financing from development partners.
Looking ahead
The IMF mission’s reviews in December will serve as a litmus test for Egypt’s reform trajectory. Successful completion will unlock further loan tranches, reinforcing confidence in the government’s ability to navigate economic challenges.
With inflation easing, reserves strengthening, and fiscal performance improving, Egypt enters the negotiations with cautious optimism.
