Egypt has reached a significant milestone in its economic turnaround following the completion of the International Monetary Fund’s (IMF) fifth and sixth reviews of the Extended Fund Facility (EFF) and the first review of the Resilience and Sustainability Facility (RSF). The approvals have unlocked a drawdown of $2.3 billion, signaling strong institutional confidence in Cairo’s stabilization efforts and marking a shift from crisis management toward sustainable growth.
“Egypt’s macroeconomic situation has improved amid sustained stabilization efforts. Tight monetary and fiscal policies together with exchange rate flexibility have helped restore macroeconomic stability, reduce inflation, and strengthen the external position” stated the report.
The country’s macroeconomic recovery is gaining momentum. Real GDP growth rose to 4.4% in the 2024/25 fiscal year, up from 2.4% the previous year, and accelerated further to 5.3% in the first quarter of FY2025/26. Analysts point to broad-based growth driven by non-oil manufacturing, transportation, financial services, and a booming tourism sector.
Easing inflationary pressures
Headline urban inflation retreated to 12.3% by December 2025 and continued its decline to reach 11.5% in February 2026. More notably, core inflation plummeted from 26.6% at the close of FY2023/24 to 11.8% by the end of 2025. This significant deceleration underscores the effectiveness of a restrictive monetary policy stance and the transition toward greater exchange rate flexibility.
Investor confidence is on an upward trajectory
Remittances reached 9.9% of GDP in FY2024/2025, which, coupled with robust tourism receipts, narrowed the current account deficit to 4.2%. Furthermore, the resurgence of non-resident inflows into domestic debt markets and resilient Foreign Direct Investment (FDI) underscore a renewed global trust in the economy. This stabilizing trend is further evidenced by gross foreign reserves, which climbed to 59.2 billion by the end of 2025.
The government is using the improved fiscal space to expand social support. Funding for the Takaful and Karama conditional cash transfer program has been raised to EGP 54 billion FY2025/2026 from EGP 43 billion in FY2024/2025, with in-kind support reaching EGP 31.2 billion from EGP 6 billion in the previous fiscal year.
Officials say Egypt is moving beyond stabilization toward private-sector-led growth, guided by the “National Narrative for Economic Development.” With IMF backing and strengthened macroeconomic buffers, Cairo is charting a course toward a climate-resilient, globally competitive, and prosperous economic future.
