Egypt announced on Tuesday (June 30th) that it has reached a preliminary agreement with the International Monetary Fund (IMF), which may allow it to obtain new financing worth about $1.64 billion, subject to the approval of the IMF's Executive Board, without specifying a date for making a decision.
Egyptian Prime Minister Mostafa Madbouly said in a statement that the government and the IMF team had reached an expert-level agreement on the seventh review of the Extended Fund Facility program, as well as the second review of the Resilience and Sustainability Facility Program.
Madbouly explained that the agreement allows Egypt to obtain about 1.11 billion Special Drawing Rights (SDRs), equivalent to about $1.5 billion, within the "Extended Fund Facility" program, in addition to 100 million SDRs, equivalent to about $136 million, within the framework of the "Resilience and Sustainability Facility Program."
IMF awaits approval from its Executive Board
For its part, the International Monetary Fund (IMF), in a statement issued after the conclusion of its mission to Egypt, confirmed that an agreement had been reached at the expert level on the two reviews and the amount of funding, noting that the disbursement of the agreed amounts remains subject to the approval of the IMF's Executive Board, without specifying a date.
The IMF added that if the new financing is approved, Egypt's total receipts under the two programs will increase to about 5.3 billion SDRs, equivalent to about $7.2 billion.
How did Egypt meet the IMF's conditions?
Egypt has fulfilled a set of structural commitments that prompted the International Monetary Fund (IMF) mission to approve the disbursement of the new tranche after recording clear progress in the files pledged by Cairo within the Joint Reform Program.
The Egyptian government has completed privatization targets by implementing deals in the energy and wind sector, including the Jabal al-Zeit project, in addition to the temporary listing of four state-owned companies on the stock exchange, which strengthened the fund's confidence in the state's ability to expand the ownership base and improve the efficiency of asset management.
The Central Bank of Egypt (CBE) also committed to implementing a flexible exchange rate policy, which allowed for the absorption of external shocks and the stability of the money market, which was reflected in the rise in foreign exchange reserves to exceed $53 billion, a key indicator in the IMF's valuation.
The government achieved a primary surplus by the end of March, with expectations of 5% in the 2026/2027 fiscal year, which the IMF saw as evidence of improved fiscal management and the state's ability to control spending.
What does the IMF ask of Egypt?
The International Monetary Fund (IMF) has stressed the need for a range of policies to ensure the sustainability of the recovery, while praising the growth of the Egyptian economy by 5.2% during the first nine months of the fiscal year.
According to Egyptian government reports, the IMF is demanding that a tight monetary policy be maintained to curb inflationary pressures associated with geopolitical tensions in the region while urban inflation remains at 14.6%.
The IMF calls for continued rationalization of energy, fuel, and electricity subsidies, in exchange for expanding social protection programs for the most vulnerable, ensuring a balance between fiscal reform and social justice.
Previous Funding
In December 2022, Egypt received a financing program from the International Monetary Fund (IMF) worth $3 billion, before the IMF agreed to increase it to $8 billion in March 2024.
One of the IMF's main lending instruments, the Extended Fund Facility (EFF) program targets countries facing long-standing structural balance-of-payments imbalances in exchange for implementing economic reforms aimed at promoting stability and sustainable growth.
The SDR is an international reserve asset established by the International Monetary Fund (IMF) in 1969, and is not a currency in circulation, but is valued based on a basket of 5 major currencies: the US dollar, the euro, the Chinese yuan, the Japanese yen, and the British pound, and can be exchanged by member states for usable foreign currencies when needed.
The IMF approved a financing arrangement for Egypt under this program in December 2022, provided that the financing tranches will be disbursed successively after completing periodic reviews and ensuring compliance with the agreed reforms.
The Resilience and Sustainability Facility is a financing tool created by the Fund to support low- and middle-income countries in addressing long-term challenges, such as climate change and pandemic preparedness, by providing long-term financing on concessional terms in exchange for implementing reforms that enhance resilience and sustainability.
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