The International Monetary Fund (IMF) has approved the release of $1.2 billion to Egypt following the fourth review of its emergency loan program, while emphasizing the need for more decisive economic reforms.
This latest disbursement brings Egypt’s total loan drawdown to approximately $3.2 billion under an $8 billion Extended Fund Facility (EFF), the IMF announced in a statement.
Stronger Reforms Required for Sustainable Growth
The 46-month EFF agreement, initially approved in 2022, was contingent on Egypt implementing key economic reforms, including the sale of state assets, to stabilize its slowing economy and bolster foreign exchange reserves.
In a rare blunt warning, the IMF stressed that «more decisive implementation of reforms will be critical» to ensure Egypt achieves sustainable economic growth.
«Moving forward, priority should be given to strengthening domestic revenues, improving the business climate, accelerating state divestments, ensuring fair competition, and enhancing governance and transparency,» the IMF stated on Tuesday.
Economic Challenges and Revenue Declines
Egypt’s economy continues to face significant hurdles, particularly from the ongoing instability in the Red Sea, which has severely impacted revenue from the Suez Canal—a crucial foreign exchange source. In 2024, Suez Canal revenues plunged 60% year-on-year, representing a $7 billion loss due to disruptions in global shipping traffic.
Despite these setbacks, Egypt’s economic growth rebounded to 3.5% in the first quarter of fiscal 2024/25. However, the current account deficit widened to 5.4% of GDP, as strict expenditure controls were not enough to offset domestic revenue shortfalls, the IMF noted.
Additional IMF Support and Fiscal Adjustments
Alongside the fourth loan disbursement, the IMF has approved Egypt’s request for an additional $1.3 billion under a Resilience and Sustainability Facility to support long-term economic stability. The Fund also agreed to «recalibrate» Egypt’s medium-term fiscal strategy, ahead of the fiscal 2025/26 budget cycle, which begins on July 1.
The approval of these funds is expected to provide much-needed support to Egypt’s financial system, particularly in rolling over $20 billion in domestic treasury bills set to mature this month, according to analysts cited by Reuters.
