The IMF team and the Egyptian authorities made good progress on the assessment of economic performance and implementation of policy commitments under the Extended Fund Facility (EFF) arrangement.
As Egypt’s macroeconomic stabilization is taking root, it is now time to accelerate and deepen the reform efforts to reduce the state footprint, level the playing field, and improve the business environment.
Discussions will continue virtually to finalize agreement on remaining policies and reforms that could support completion of the fifth review.
Washington DC 28 May 2025:
An International Monetary Fund (IMF) staff team led by Ms. Vladkova Hollar visited Cairo from May 6 to May 18, and held productive discussions with the Egyptian authorities on economic and financial policies that could underpin the completion of the Fifth Review under the Extended Fund Facility (EFF) arrangement.
At the end of the mission, Ms. Vladkova Hollar issued the following statement:
“The Egyptian authorities and IMF staff held constructive discussions which have advanced the technical work and policy discussions as part of the Fifth Review under the Extended Fund Facility.
“Egypt has made substantial progress toward macroeconomic stability. Growth is expected to continue strengthening, and we upgraded our forecast for FY24/25 to 3.8 percent, in light of the stronger-than-expected outturn in the first half of the year. At the same time, the private investment share in total investment rose from 38.5 percent in H1 FY23-24 to almost 60 percent over the same period in FY24-25. Inflation rose slightly to 13.9 percent in April but remains on a downward trend. The current account remains wide, as rising imports, reduced hydrocarbon output, and Suez Canal disruptions offset strong tourism, remittances, and non-oil exports. Greater fiscal prudence—including through better oversight and control over large public sector infrastructure projects—is helping to contain demand pressures, with total public investment spending remaining below the established ceiling for July – December 2024.
“We welcome the authorities’ recent efforts to modernize and streamline tax and customs procedures to increase efficiency and build confidence. These reforms are starting to yield positive results. Alongside these efforts, domestic revenue mobilization will need to continue, mainly by widening the tax base and streamlining tax exemptions, to support the government’s capacity to spend sufficiently on priority development and social needs. We also welcome the authorities’ efforts to develop a medium-term debt management strategy that aims to improve transparency and gradually reduce the large debt service cost in the budget.
“With the macroeconomic stabilization now underway, it is critical for Egypt to carry out deeper reforms to unlock the country’s growth potential, create high-quality jobs for a growing population, and sustainably reduce its vulnerabilities and increase the economy’s resilience to shocks.
“In order to deliver on these objectives, decisively reducing the role of the public sector in the economy and leveling the playing field for all economic agents should be key policy priorities. The implementation of the State Ownership Policy and the asset divestment program in sectors where the state has committed to reduce its footprint will play a critical role in strengthening the ability of the private sector to better contribute to economic growth in Egypt. Complementing this, efforts need to continue to improve the business environment.
“We are grateful for the warm hospitality extended by the authorities during this mission. Discussions will continue virtually to finalize agreement on the remaining policies and reforms that could support the completion of the fifth review.”
