The executive board of the International Monetary Fund completed the seventh review under the 48-month Extended Arrangement under the Extended Fund Facility and the second review under the Resilience and Sustainability Facility arrangement for the Arab Republic of Egypt.

Completion of the reviews allowed the authorities to immediately draw the equivalent of $1.5 billion under the EFF and about $272 million under the RSF, bringing total purchases and disbursements under the two arrangements to about $7.3 billion.

Egypt has faced the implications of the war in the Middle East in a stronger macroeconomic position than during previous episodes of external stress, with robust growth, inflation on a downward trend and rising gross international reserves.

The economic impact of the war in the Middle East on the Egyptian economy has remained relatively contained, reflecting the authorities’ timely and decisive policy actions, including exchange rate flexibility, energy price adjustments, and measures to contain budget spending, according to the global financial organisation.

Economic activity has continued to recover, with real GDP growth reaching five per cent in the third quarter of FY2025/26, bringing growth over the first nine months of the fiscal year to 5.2 per cent. This performance is expected to help keep growth in FY 2025/26 at about 4.6 per cent, only 0.1 percentage points lower than at the time of the fifth and sixth reviews.

Headline inflation declined steadily until March 2026, when it increased to 15.2 per cent—about 1.4 percentage points above staff expectations—mainly due to exchange rate depreciation and higher energy prices. Headline inflation subsequently eased to 14.3 per cent in June, while core inflation rose to 14.3 per cent, with IMF estimates indicating that seasonally adjusted month-on-month core inflation remained elevated at 1.5 per cent.

The current account came under pressure in March following higher oil and gas prices. However, record remittance inflows, robust tourism receipts, and a gradual recovery in Suez Canal revenues helped contain the impact, with the current account deficit estimated at 4.5 per cent of GDP in FY 2025/26.

Oil hedging contracts and long-term gas supply agreements further cushioned the impact of higher energy prices. Gross international reserves remained strong, reaching 119 per cent of the ARA metric by end-June, including through recent purchases by the central bank amid renewed inflows.

Fiscal performance has remained strong, according to the IMF. By end-March 2026, both the primary balance and tax revenue targets had been exceeded, reflecting strong revenue mobilisation and expenditure containment efforts. At the same time, the authorities have made progress in reducing GFNs, which declined by five per cent of GDP in FY2025/26.

The tax-to-GDP ratio is projected to rise by 1.2 percentage points in FY2025/26, while continued revenue mobilisation is expected to increase the primary surplus from 4.8 per cent of GDP in FY2025/26 to 5 per cent of GDP in FY2026/27.