• I.M.F. completes two reviews, unlocking about $2.3 billion for Egypt

• Inflation has fallen sharply, and currency pressures have eased

• The Fund warns that structural reforms and privatizations remain uneven

The International Monetary Fund said on Feb. 25 that it had completed two additional reviews of Egypt’s economic reform program, clearing the way for the disbursement of about $2.3 billion. The funds provide fresh support to an economy emerging from a severe currency crisis and a historic surge in inflation.

Of that amount, nearly $2 billion will be released under the 46-month, $8 billion loan program agreed with Cairo, following approval of the fifth and sixth reviews. An additional $273 million will be disbursed under the Resilience and Sustainability Facility. In total, about $5.2 billion has now been paid out under the two arrangements.

An Expanded Program Amid Economic Turbulence

Egypt initially signed a $3 billion agreement with the Fund in December 2022. As imbalances deepened — with soaring inflation, foreign currency shortages and mounting pressure on the Egyptian pound — the program was expanded to $8 billion in March 2024. It is scheduled to run through December.

Recent data point to improving macroeconomic conditions. Inflation, which peaked at 38% in September 2023, fell to 11.9% year over year in January for urban prices. Pressures in the foreign exchange market have also eased.

The Fund attributed the stabilization to tight monetary and fiscal policies, combined with greater exchange rate flexibility. Egypt has also benefited from record tourism revenues, strong remittance inflows and major investment agreements with Gulf countries, particularly the United Arab Emirates.

Structural Gaps Persist

Despite the progress, the I.M.F. struck a cautious tone. In its statement, it said implementation of structural reforms remains “uneven,” especially with regard to reducing the state’s role in the economy.

The sale of public assets, a central pillar of the program, has advanced more slowly than planned. The Fund also highlighted Egypt’s high public debt and large financing needs, which continue to weigh on fiscal space and medium-term growth prospects.

In August, Egyptian authorities adopted legislative amendments aimed at accelerating privatizations and attracting more private investment. Whether those measures will entrench the current stabilization remains uncertain, particularly as the economy remains exposed to external shocks and regional tensions.

Fiacre E. Kakpo