IMF board signs off on seventh review, clearing USD 1.8 bn disbursement

A fresh USD 1.8 bn IMF tranche lands tomorrow, after the Executive Board signed off on the seventh review of the country’s USD 8 bn Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF), the Fund said in a statement on Thursday. The approval unlocks immediate access to the tranche, which should hit state coffers tomorrow, IMF Mission Chief Amine Mati confirmed during a virtual press conference attended by EnterpriseAM.

The breakdown: The disbursement includes USD 1.5 bn under the EFF and USD 272 mn under the RSF, bumping the country’s total drawings across both programs to roughly USD 7.3 bn.

The macroeconomic fallout from the regional war has remained “relatively contained,” according to the statement. The IMF credits this resilience to the government’s decisive policy actions, specifically maintaining a flexible exchange rate, adjusting fuel prices, and curbing public spending. Real GDP grew 5% in 3Q FY 2025/26, bringing 9M growth to 5.2%. Full-year growth is projected to come in at 4.6%, only slightly below earlier projections.

Remittances and hedging offset the energy squeeze: Surging oil and gas prices pushed the current account deficit to an estimated 4.5% of GDP in FY 2025/26. However, this deterioration was largely offset by resilient tourism receipts, state oil hedging contracts, and long-term gas supply agreements. A record surge in remittances, which hit nearly USD 4 bn in April alone in a monthly record, also helped plug the gap. Also, Suez Canal revenues stabilized at around USD 380 mn a month, though well below the roughly USD 890 mn recorded before the disruptions in Red Sea shipping, Mati said.

The float worked: Egypt entered the conflict with around USD 69 bn in reserves. Allowing the EGP to move freely helped absorb external shocks; the currency depreciated by up to 17% during periods of capital outflows before recovering as inflows returned, Mati said.

Fiscal targets reached: Egypt outperformed its primary surplus and tax revenue targets by the end of March, driving gross financing needs down by around five percentage points of GDP in FY2025/26. The IMF expects the state’s primary surplus to rise from 4.8% of GDP last FY to 5% this year on the back of stronger revenue mobilization and continued tax reforms.

The numbers behind the headline

The budget deficit is narrowing: The IMF’s assessment comes as Finance Ministry data shows the budget deficit narrowing to 5.3% of GDP in the first 11 months of FY 2025/26, down from 6.5% a year earlier, according to the Finance Ministry’s monthly fiscal report (pdf). A 27.5% jump in tax revenues helped offset an EGP 2.1 tn interest bill, which ate up over half of all government spending. The primary surplus surged 70% y-o-y to EGP 985.1 bn (4.6% of GDP), padded by EGP 166.8 bn in exceptional proceeds from the Alam El Roum development project.

Inflation remains the primary macro hurdle: Headline inflation cooled to 14.3% in June after peaking at 15.2% in March, but the IMF expects it to average 16.7% in 2H 2026 as higher energy prices and a weaker EGP ripple through the economy. The IMF now expects inflation to return to the CBE’s target range around one year later than previously projected, Mati said.

Assessments continue

Progress in structural reforms, particularly reducing the state’s role in the economy, has been “uneven,” while efforts to create greater space for private sector investment “have progressed more slowly than anticipated and need to be accelerated,” according to the statement.

More state-asset sales needed: Egypt still needs to complete another USD 1.5 bn in divestments before the IMF program concludes in December, with Banque du Caire’s planned IPO and further state stake sales among the transactions expected to contribute to the target, Mati said.

The Fund is also assessing the implications of Egypt’s newly approved Future of Egypt Authority law — which places the authority under the direct oversight of the presidency — to ensure it aligns with the State Ownership Policy and preserves a level playing field for the private sector, Mati said.

The IMF’s mandate: Deputy Managing Director and Acting Chair Nigel Clarke called for “more decisive implementation” of structural reforms to drive private sector-led growth. He also called for faster implementation of the State Ownership Policy, accelerated divestment, and stronger governance of state-owned enterprises to improve competitive neutrality.

Regional tensions remain the biggest downside risk: The IMF sees growth cooling slightly to 4.4% in FY 2026/27 as the delayed shocks of regional conflict drag on investment. The math is tight: Every USD 10 spike in global oil prices widens the fiscal deficit by 0.3% of GDP and the current account deficit by up to 0.5%. To mitigate this, the Fund expects Egypt to resume its automatic fuel pricing mechanism.

What’s next for the IMF program? Talks are zeroing in on the final review this December. There is still roughly USD 1.5 bn on the table under the EFF and USD 800 mn under the RSF, Mati said. While the Fund remains open to a successor arrangement or advisory support post-2026, no formal talks on a new program have materialized yet, he added. Deputy Prime Minister for Economic Affairs Hussein Eissa has indicated that the government aims to finalize its post-IMF economic program by September, aligning with earlier signals that the state does not intend to pursue a successor program.