Executive Board of the International Monetary Fund (IMF) has approved the combined fifth and sixth reviews of Egypt’s economic reform program under the $8 billion Extended Fund Facility (EFF), alongside the first review under the $1.3 billion Resilience and Sustainability Facility (RSF), unlocking about $2.27 billion in fresh financing, the fund announced on Thursday.
The country’s 46-month EFF arrangement, originally approved in December 2022, has been extended through 15 December 2026. The EFF programme conclusion was primarily scheduled in September 2026, then extended to November 2026 before the latest extension.
In a statement issued following the board meeting, the IMF praised the improvement of Egypt’s macroeconomic conditions.Real GDP growth accelerated to 4.4 percent in FY2024/2025, inflation declined sharply to 11.9 percent in January 2026, supported by tight monetary and fiscal policies, and the gross international reserves rose from $54.9 billion in December 2024 to about $59.2 billion in December 2025, supported by exchange rate flexibility and improved external conditions.
The current account deficit narrowed to 4.2 percent of GDP, reflecting strong remittances and tourism revenues. The Fund noted improved market confidence, highlighted by successful external bond issuances, foreign direct investment inflows, and record non-resident inflows into domestic debt markets.Fiscal performance also strengthened due to higher tax revenues and lower public investment, although the primary surplus target was missed in the absence of anticipated divestment proceeds.
Regarding the RSF program, the IMF said the authorities have completed two key reform measures, including publication of an implementation schedule for renewable energy targets and issuance of a directive requiring banks to monitor and report exposure to climate transition risks.
Despite the improved macroeconomic outlook, the IMF cautioned that structural reform implementation has been uneven. Progress on reducing the state’s footprint, particularly through divestment of non-strategic assets, has been slower than envisaged, while high public debt and elevated gross financing needs continue to constrain fiscal space.
The report said that the downside risks remain significant, particularly from regional geopolitical tensions, tighter global financial conditions, and delays in energy and structural reforms. But on the upside, a rebound in Suez Canal activity, higher hydrocarbon production, or faster-than-expected inflows linked to Gulf-backed mega projects could bolster growth and external balances.
In remarks following the board discussion, IMF Deputy Managing Director Nigel Clarke said Egypt’s stabilization measures are delivering results, with growth picking up and inflation easing.“However, further progress on deeper reforms, particularly in divestment in non-strategic sectors and debt management, is needed to reduce risks to attaining key program objectives. Further progress in these areas will be essential to crowd in private investment, reduce financing needs, and generate more inclusive and sustained growth over the medium term,” he added.
Clarke underscored the importance of broadening the tax base, reducing VAT exemptions, strengthening tax compliance, and fully implementing recently approved tax measures. He also called for greater fiscal transparency, tighter oversight of off-budget entities, faster divestment progress, and continued strengthening of governance and risk management at state-owned banks.
Maintaining a flexible exchange rate regime remains essential to preventing renewed external imbalances, he added, noting that foreign exchange intervention by the Central Bank of Egypt (CBE) should be limited to addressing disorderly market conditions. Clarke concluded that sustained reform momentum will be vital to supporting resilient, inclusive, and export-led growth. However, “their impact will remain limited without tangible progress on divestment.”
