Cairo – Mubasher: The executive board of the International Monetary Fund (IMF) has completed the fourth review of Egypt’s economic reform program supported by the EFF arrangement.
Concluding the review enables the Egyptian authorities to immediately draw about $1.20 billion (SDR 922.87 million), according to an official statement.
This brings Egypt’s total purchases under the EFF to about $3.20 billion (SDR 2.42 billion or 119% of quota).
Egypt’s 46-month EFF arrangement was approved on 16 December 2022. In addition, the IMF Executive Board approved the authorities’ request for an arrangement under the Resilience and Sustainability Facility (RSF), with access of about $1.30 billion (SDR 1 billion).
The Egyptian authorities have continued to implement key policies to preserve macroeconomic stability, despite ongoing regional tensions that had caused a sharp decline in Suez Canal receipts. While growth slowed to 2.4% in fiscal year (FY) 2023/2024, down from 3.8% in the previous FY, it recovered back to about 3.5% on an annual basis in the first quarter (Q1) of the current FY24/25.
Moreover, inflation has trended downward since September 2023; during the same period of FY23/24, the current account deficit widened to 5.4% of GDP, while the primary fiscal balance improved by 1% to 2.5% of GDP, due to tight expenditure controls that have more than offset domestic revenue underperformance.
The IMF executive board approved the authorities’ request to recalibrate the authorities’ medium-term fiscal commitments. In particular, the primary balance surplus, excluding divestment proceeds, is expected to reach 4% of GDP in FY25/26 and then increase to 5% of GDP in FY26/27.
The external environment is expected to remain challenging, as successive external shocks have continued and persisted.
The IMF noted that progress with the implementation of the structural reform agenda was mixed, with notable delays on critical reforms related to divestment and leveling the playing field.
Deputy Managing Director and Chair, Nigel Clarke, said: “Since March 2024, the authorities have made considerable progress in stabilizing the economy and rebuilding market confidence despite a challenging external environment marked by persistent and successive external shocks, including regional conflicts and trade disruptions in the Red Sea.”
Clarke added: “Notably, GDP growth has shown signs of recovery, inflation is gradually moderating, and foreign exchange reserves are at adequate levels.”
He noted that “High debt, substantial gross financing needs, and domestic rollover risks continue to present significant medium-term fiscal challenges, while mixed progress on structural reforms is hindering growth prospects, constraining private sector development.”
Clarke further said: “To foster resilience and promote dynamic, inclusive, and export-led growth, the authorities must transition to a new economic model. Decisively reducing the state's footprint, leveling the playing field, allowing energy prices to reach cost recovery levels, and addressing governance and transparency issues will enable the private sector to become the primary engine of growth.”
The official concluded: “The economic outlook is vulnerable to external shocks and domestic policy challenges. In particular, regional conflicts and trade disruptions could further strain fiscal revenues, foreign direct investment, and external stability. Domestically, needed reforms in energy prices and subsidies and tax policy carry social costs that must be carefully managed, while the state’s extended role in non-strategic sectors and limited efforts to enhance market competition could impact medium-term growth.”
