A mission from the International Monetary Fund (IMF) has arrived in Egypt to begin the fifth review of the North African country’s $8 billion economic reform programme, a critical step in unlocking further financial assistance amid ongoing economic turbulence.
The team is scheduled to remain in Cairo until May 16 as it evaluates the progress Egypt has made since the last assessment in March. The visit comes under a 46-month loan agreement initially approved in 2022 and expanded in the wake of the conflict in Gaza.
Funding Released, But Staff Report Withheld
In March, the IMF’s Executive Board concluded its fourth review, resulting in the release of $1.2 billion in financing. However, the Fund has yet to publish its staff report, citing a request from Egyptian authorities for additional time to consider its contents.
In a further show of support, the board also approved an additional $1.3 billion under the IMF’s Resilience and Sustainability Facility, which is aimed at helping countries build stronger economic and climate resilience.
Economic Strains Persist
Egypt’s economy has faced acute challenges over the past year. A chronic shortage of foreign currency and surging prices pushed inflation to a staggering 38% in September 2023, one of the highest in the region.
Amid these pressures, Egypt successfully negotiated a revision to its fiscal targets during the last review. The IMF approved a waiver allowing Cairo to lower its primary budget surplus goal to 4% of GDP for the fiscal year starting July 1—down from the 4.5% previously committed to.
Focus of the Current Review
The current review is expected to assess Egypt’s adherence to reform benchmarks, including fiscal adjustments, exchange rate flexibility, and social protection policies. The outcome will determine the timing and scale of subsequent disbursements.
As regional economies continue to navigate instability, Egypt’s engagement with the IMF remains a bellwether for broader economic strategies across North Africa.