The International Monetary Fund (IMF) has reached a staff-level agreement with Egypt on the fifth and sixth reviews under the Extended Fund Facility and the first review under the Resilience and Sustainability Facility, thereby clearing the way for consideration by the IMF Executive Board. The IMF stated on Tuesday that macroeconomic stabilisation efforts have continued to yield gains, with economic growth accelerating to 4.4 per cent in FY 2024/25 from 2.4 per cent a year earlier, and rising further to 5.3 per cent year on year in the first quarter of FY 2025/26. Stabilisation efforts have delivered important gains, and the Egyptian economy is showing signs of robust growth. This stability has been achieved amid a challenging regional security environment and heightened global uncertainty. This growth was broad-based, supported in particular by strong performance in non-oil manufacturing, transport, finance, and tourism. Meanwhile, the balance of payments improved markedly despite external headwinds, as the current account deficit narrowed on the back of strong remittances, resilient tourism receipts, and solid growth in non-oil exports. At the same time, external financing conditions eased in 2025, with non-resident inflows into local-currency debt reaching about $30 billion, while foreign reserves rose to $56.9 billion. Fiscal performance also remained robust, with a primary surplus of 3.5 per cent of GDP in FY 2024/25, underpinned by strong tax revenue growth. Continued efforts are needed to close the tax-to-GDP gap and place gross budget sector debt on a firm downward path while safeguarding targeted social spending. Accordingly, authorities are targeting primary surpluses of 4.8 per cent of GDP this year and 5 per cent in FY 2026/27, alongside a growth-friendly tax reform package expected in January 2026. The Central Bank of Egypt (CBE) maintained a tight monetary stance, pursuing cautious and gradual easing to support disinflation. Headline urban inflation edged up to 12.3 per cent year on year in November after hitting a 40-month low in September, prompting the IMF to stress careful management of the easing cycle. Furthermore, the IMF highlighted the need to accelerate structural reforms, including reducing the state's role in the economy, advancing the divestment programme, and levelling the playing field for the private sector. Reforms under the Resilience and Sustainability Facility were described as on track, with significant progress made on renewable energy planning and climate-related financial supervision. The authorities are also making good progress towards delivering on the remainder of the reform measures. Attribution: Amwal Al Ghad English
