The IMF approves Egypt’s $1.2 billion payout following its fourth review

The IMF has approved a $1.2 billion transfer to Egypt in support of economic reforms and budgetary stability following its fourth review.

After Egypt’s $8 billion economic reform program’s fourth review was completed, the International Monetary Fund (IMF) authorized the payment of $1.2 billion to the government. This follows the waiver of Egypt’s primary budget surplus aim.

Egypt also gained access to about $1.3 billion in funds after the IMF’s executive board granted Cairo’s request for an agreement under the Resilience and Sustainability Facility. Cairo had applied for funding under this facility for the first time in 2022.

According to the most recent agreement, Egypt’s fiscal obligations were modified, and the primary budget surplus of the nation—apart from asset sales proceeds—is anticipated to amount to 4% of GDP in the fiscal year 2025–2026, which starts on July 1, 2025. The initial goal established under Egypt’s IMF program is 0.5% higher than this number.

According to the statement, “the Executive Board granted the authorities’ request to recalculate their medium-term fiscal commitments.” “Specifically, the primary balance surplus (not including divestment proceeds) is anticipated to reach 4% of GDP in the upcoming fiscal year,” the statement stated. On July 1, the fiscal year 2025–2026 officially begins.

Reduced natural gas production and regional tensions have caused a steep drop in Suez Canal income, which has made Egypt’s severe inflation and foreign exchange shortages worse. Recent financial reforms, however, under the program supported by the IMF, have contributed to economic stabilization. Egypt stated that the annual urban consumer price inflation rate has decreased from 24.0% in January to 12.8% in February, almost halving.

Egypt is anticipated to benefit from the resilience and sustainability facility funds as well as the IMF’s most recent approval in managing its short-term financial commitments. The payout is expected to help the nation roll over some $20 billion in domestic treasury bills that are due to maturity this month, many of which are owned by foreign investors, according to analysts and bankers.

The new IMF investment is viewed as an essential step in bolstering fiscal reforms, stabilizing Egypt’s economy, and reviving investor confidence in the face of persistent economic difficulties.