The International Monetary Fund (IMF) has reached a staff level agreement with Egypt on the fifth and sixth reviews under its Extended Fund Facility arrangement, potentially unlocking roughly 2.5 billion dollars under the programme announced Tuesday December 22, 2025.
The IMF mission led by Vladkova Hollar visited Cairo from December 1 to 11 and held productive virtual discussions with Egyptian authorities thereafter. The agreement also covers the first review under the Resilience and Sustainability Facility which could provide Egypt access to an additional 1.3 billion dollars subject to IMF Executive Board approval.
The IMF said Egypt’s stabilization efforts were delivering important gains with the economy showing signs of robust growth. Egypt’s economy expanded by 4.4 percent in the 2024 to 2025 fiscal year up sharply from 2.4 percent the previous year driven by strong performance in non-oil manufacturing, transportation, finance and tourism.
Growth accelerated to 5.3 percent year on year in the first quarter of fiscal year 2025 to 2026 signaling improving underlying economic conditions. The recovery has been broad based despite a difficult regional security environment and heightened global uncertainty according to the fund.
The IMF noted marked improvement in Egypt’s balance of payments even facing adverse external developments. The current account deficit narrowed as remittances and tourism receipts remained buoyant while non-oil exports registered strong growth. External financial conditions eased significantly in 2025 with non-resident inflows into local currency debt rising to around 30 billion dollars and foreign currency reserves reaching 56.9 billion dollars.
Fiscal performance remained robust with Egypt recording a primary surplus of 3.5 percent of gross domestic product in fiscal year 2024 to 2025. Tax revenues grew by 36 percent in that fiscal year and by 35 percent during July to November of fiscal year 2025 to 2026 reflecting reforms to widen the tax base, improve compliance and streamline exemptions.
However, the IMF cautioned that Egypt’s tax to GDP ratio at 12.2 percent remains low by international standards. Sustained efforts would be needed to raise revenues further, reduce public debt and preserve space for targeted social spending. The authorities are targeting a higher primary surplus of 4.8 percent of GDP in the current fiscal year and 5 percent in fiscal year 2026 to 2027.
A growth friendly tax reform package expected to be approved by cabinet in January 2026 is projected to boost revenues by about one percent of GDP next year. The Central Bank of Egypt has maintained an appropriately tight monetary policy stance pursuing cautious and gradual easing to support ongoing disinflation.
While headline urban inflation fell to a 40 month low in September, it edged up slightly to 12.3 percent year on year in November. The IMF stressed that easing should remain carefully managed as disinflationary pressures are not yet fully entrenched. Egypt’s inflation peaked at 38 percent in September 2023.
The fund combined the fifth and sixth reviews of Egypt’s support programme to give authorities more time to meet critical objectives embedded in the agreement. Egypt agreed to the expanded 8 billion dollar 46 month loan in March 2024 at a time when it was grappling with high inflation and shortages of foreign currency.
The IMF has so far paid out about 3.5 billion dollars under the loan programme. The country’s foreign currency shortage has eased helped by the IMF loan programme, record tourism revenues, remittances from Egyptians working abroad and investment deals with Gulf countries including the United Arab Emirates worth tens of billions of dollars.
The IMF urged Egypt to accelerate reforms aimed at shifting toward a more competitive private sector driven growth model. Discussions focused on the government’s National Narrative for Economic Development which prioritizes easing the business environment, improving trade facilitation and streamlining tax procedures.
The fund said further efforts are needed to reduce the role of the state in the economy including faster progress on divestment and avoiding expansion of state owned enterprises into new commercial activities. In August, Egypt ratified legislative amendments aimed at accelerating the sale of state owned assets though the IMF believes progress has been slow.
The IMF highlighted the need for continued strong governance in Egypt’s banking system particularly given the large presence of state owned banks. Robust oversight is critical to maintaining financial health, strengthening monetary policy transmission and promoting competition. The Central Bank of Egypt has committed to completing third party reviews to ensure best practices are followed across the sector.
Under the Resilience and Sustainability Facility, Egypt is making good progress on climate related reforms. Authorities have already implemented key measures including publishing a renewable energy implementation schedule and issuing a directive requiring banks to monitor and report exposure to climate transition risks linked to the European Union’s Carbon Border Adjustment Mechanism.
The IMF mission expressed appreciation to Egyptian authorities for constructive engagement noting that continued reform momentum will be critical to sustaining stability and unlocking durable private sector led growth. The staff level agreements must still be approved by the IMF Executive Board before funds are disbursed.
