Egypt has unlocked roughly $1.8 billion in funding after clearing the latest review from its expanded economic programme with the International Monetary Fund.
The Arab world's most populous country receives immediate access to $1.5 billion as part of a 48-month arrangement under the Extended Fund Facility. The IMF executive board also approved roughly $272 million under a separate Resilience and Sustainability Facility arrangement.
The Washington-based lender said Egypt had weathered the economic fallout from the Middle East war relatively well, helped by timely policy measures including exchange-rate flexibility, energy price adjustments and spending controls.
"A lot of the programme targets ... for March and June, were met despite the very challenging situation, and that was done with decisive policy actions," Amine Mati, IMF mission chief for Egypt, told reporters.
As a net energy importer, Egypt was forced to introduce energy-saving measures as the war drove up oil and gas prices, adding to inflationary pressures and the cost of living.
Egypt entered into an expanded $8 billion programme with the IMF in early 2024 as the war in Gaza heightened an economic crisis for Cairo that included high inflation and a shortage in foreign currency reserves.
The UAE had also made significant investment pledges, while the World Bank and Europe provided Egypt with capital injections.
Egypt's economy continued to recover, with growth reaching 5 per cent in the third quarter of fiscal year 2025/26, and 5.2 per cent for the first nine months. The economy is projected to expand by 4.6 per cent for the whole fiscal year, 0.1 percentage point lower than at the time of the fifth and sixth reviews, the IMF said.
Headline inflation fell to 14.3 per cent in June from 15.2 per cent in March as oil prices fell following a ceasefire agreement between the US and Iran.
Record remittance inflows, robust tourism receipts and a gradual recovery in Suez Canal revenue also helped in containing the impact of higher oil and gas prices on Egypt's current account, the IMF said.
Fiscal performance has also remained strong, with tax revenue exceeding targets by the end of March.
However, heightened uncertainty continues to weigh on growth in the near term, with growth projected to moderate to 4.4 per cent for the 2026-2027 fiscal year as a result of lagged effects of the war, including weaker investment and higher input costs.
"The downside risk remains important," Mr Mati said, referring to an escalation in the Iran war.
"This could tighten financial conditions, and this could put more pressure on the fiscal and external positions. You could also have domestic risk in terms of implementation."
On the upside, a renewal of the US-Iran ceasefire agreement may help lower energy prices and improve investor sentiment.
The US and Iran reached an agreement in June to stop fighting for 60 days. However, the ceasefire broke down after Iran and the US exchanged missiles and drones over the past two weeks, with shipping traffic across Hormuz strait and Bab Al Mandeb strait remaining disrupted.
“Egypt entered the period of the war in the Middle East from a solid macroeconomic position, reflecting substantial progress in restoring stability and rebuilding buffers under the Fund-supported programme,” Nigel Clarke, deputy managing director and acting chairman of the IMF, said.
“However, important vulnerabilities remain, reflecting elevated public debt, large gross financing needs, and a sizeable state footprint.”
Mr Clarke underscored the importance of continued fiscal discipline and accelerating reforms, including implementation of the state-ownership policy and the divestment agenda, to maintain macroeconomic stability and strengthen resilience in Egypt.
