The rationale behind Madbouly’s no-new-IMF-program signal

No talks are underway for a new IMF program to follow the current USD 8 bn Extended Fund Facility after it expires in December, a government official close to the matter tells EnterpriseAM — which goes against speculation by Standard Chartered yesterday that a smaller successor facility remains on the table.

End of program, not end of relationship: The source says the government is currently focused on completing the seventh review and the eighth (and final) review in November. Even after the program ends in December, the Fund will continue conducting periodic economic reviews and providing technical and advisory support, the source notes.

IN CONTEXT- After the Fund’s most recent visit in May, Prime Minister Mostafa Madbouly said Egypt sees no need for a new program, arguing that current conditions are “sufficiently stable to allow it to continue implementing its reform agenda without the need for additional financing programs.” But some analysts disagree. Yesterday, Standard Chartered economist Bader Al Sarraf said Egypt could enter a new, limited IMF program worth less than the current USD 8 bn during a Cairo press conference, with the scope dependent on the challenges the country faces going forward.

Analysts read this as a medium-term call, not a permanent break. Hany Genena, head of research at Al Ahly Pharos, tells EnterpriseAM that the next two to three years look financeable on the strength of remaining IMF tranches, fiscal reforms, privatization, and subsidy restructuring — but that “it is difficult for any country to assert conclusively that it will not need the Fund in the long term.”

The structural tailwinds to keep an eye on: Genena sees that Egypt is better positioned to finance its “twin deficits,” fiscal and current account, with debt-for-investment swaps — including potential conversion of Gulf exposures into direct investments — as a tool that could shrink external liabilities further.

Thndr’s Esraa Ahmed is more cautious, warning that external factors could cause sudden currency or balance-of-payments crises. “Inflation could reaccelerate globally, or the US Federal Reserve could return to a tighter monetary stance by withdrawing liquidity or raising interest rates,” she explains, making “it difficult to state with certainty whether Egypt will need to return to the IMF at some point in the future.”

Finding other funds: While the debate over another IMF program continues, our source tells us that discussions are ongoing to secure “additional financing from international and development institutions over the next fiscal year.”

REMEMBER- Egypt expects to receive the remaining EUR 3 bn under the EU macro-financial assistance package before year-end, which is slated for disbursement in two tranches. The package was pledged in 2024 and promised EUR 5 bn in concessional loans. Egypt has received two tranches of EUR 1 bn so far — the first in January 2025 and the second in January 2026. However, the country needs to clear more structural benchmarks before it can secure the remaining funds.