IMF unlocks about $1.8 billion for Egypt after reviews

The International Monetary Fund has completed two reviews of Egypt's loan programme, unlocking approximately $1.8 billion in funding for the country.

The International Monetary Fund said on Thursday it completed two reviews of Egypt's loan programme, giving the country access to about $1.8 billion, as the fund presses ‌Cairo on slower-than-expected progress in reducing the state’s role in the economy. Egypt would receive about $1.5 billion under the IMF's 48-month loan programme after completing the seventh review, along with roughly $272 million under the Resilience and Sustainability Facility. The sum is expected to reach the state by August 3, IMF Mission Chief for Egypt Amine Mati told a press conference on Friday, noting that the ‌RSF portion was doubled after Egypt met a climate-related reform benchmark ahead of schedule, Egypt's programme with the IMF was expanded to $8 billion in March 2024, when the country ‌was grappling with high inflation and foreign currency shortages.

The global lender said Egypt's economy has remained resilient to spillovers from the war in the Middle East, aided by a more flexible exchange rate, fuel-price adjustments and curbs on state spending. However, the fund warned of public debt, large gross financing needs, and a sizable state footprint. Mati flagged the economy's exposure to oil-price swings, where “a $10 increase in the international oil prices would increase the deficit ⁠by about ​0.3% of GDP.” He welcomed the planned resumption ⁠of Egypt's automatic mechanism that quarterly recalibrates domestic fuel prices to move them closer in line with international oil costs, adding that the 10% quarterly cap would still shield consumers.

Efforts to reduce the state’s role in ⁠the economy and create greater space for private sector investment, including through divestment of state assets, have progressed more slowly than anticipated and need to be accelerated, the lender added. Investment Minister Mohamed Farid Saleh ​has said that four state-owned companies are expected to be listed before mid-2027 and that the government had achieved or even surpassed targets for the IMF programme, such ⁠as the country's fiscal deficit and primary surplus. The review came days after President Abdel Fattah al-Sisi ratified a law granting sweeping powers to the Future of Egypt Authority, an agency with a wide remit and roots in the military. Mati ⁠said ​that the IMF was still “in the process of assessing all the implications” and stressing it was important to see how its expansion “remains consistent with the state ownership policy.” He noted the authority previously operated mostly in food security, which sat outside the state ownership framework that was designed to reduce the role of the state. On the shift from bread ⁠subsidies to cash transfers, Mati welcomed the move to a well-targeted social safety net, but said it must be “done very carefully” to identify vulnerable households. He said Egypt's safety-net spending ⁠remains thin at 0.5, 0.6% of GDP. Talks on ⁠a successor arrangement after the programme concludes in December have not begun, Mati said. Sisi has meanwhile signaled that Egypt will not seek fresh IMF financing, directing officials to prepare a post-IMF “national programme,” which Prime Minister Mostafa Madbouly said, on Thursday, would be finalised by the ‌end of September.