IMF to provide $1.774 billion to Egypt following final Executive Board approval

The International Monetary Fund (IMF) has finalized its executive board's approval for Egypt to receive a combined disbursement of $1.774 billion, consisting of the seventh tranche under the Extended Fund Facility (EFF) and the second tranche under the Resilience and Sustainability Facility (RSF). The funds are expected to be transferred within five business days following the board’s decision, with the Central Bank of Egypt (CBE) set to receive them early next week. This follows the inclusion of Egypt’s dossier on the agenda of the Executive Board meeting held in Washington, D.C., to approve the seventh review under the EFF arrangement. The disbursement includes $1.5 billion allocated for the seventh review of the core EFF program and approximately $274 million designated under the RSF to support environmental and climate-related initiatives in Egypt. The exact amounts remain subject to final calculations based on current exchange rates and the valuation of Special Drawing Rights. The Egyptian delegation, represented by Mohamed Maait, the Executive Director for the Arab Group and Maldives on the IMF Executive Board, confirmed that the payment would occur shortly after the board’s formal approval. This marks the latest installment in an ongoing IMF-supported financing program for Egypt, which comprises an $8 billion Extended Fund Facility and an additional $1.3 billion through the Resilience and Sustainability Facility. The program aims to stabilize the country’s economy, bolster foreign exchange reserves, and ensure the sustainability of public finances amid rising global inflation and geopolitical tensions. Economic experts have expressed mixed views on the implications of the new disbursement. Fakhri al-Feky, former chairman of the Plan and Budget Committee and professor of economics at Cairo University, highlighted the potential benefits of the funds, including increased foreign exchange reserves, improved local exchange rate stability, and coverage of international financial obligations linked to foreign debt. He argued that the infusion could ease pressure on the CBE and support broader macroeconomic stability. Conversely, Medhat Nafei, another professor of economics at Cairo University, urged the government to reconsider the burden of external debt. He pointed out that Egypt paid over $8 billion in interest in 2025 alone, with total debt service payments reaching $33.4 billion. Of this, $25.36 billion was used for principal repayments, while $8.06 billion covered interest expenses. Nafei noted that interest payments accounted for roughly 24 percent of all debt service costs, emphasizing the urgent need to redirect state resources toward investments in human capital rather than debt repayment. Despite the reduction in overall debt service payments by about 13.6% compared to 2024, Nafei stressed that the real challenge lies in minimizing dependence on costly borrowing. He argued that shifting state spending from interest servicing to economic development would better serve long-term national interests. The IMF’s inclusion of Egypt on the agenda for its Executive Board meeting on Thursday reflects the continued engagement between the fund and the Egyptian authorities. The meeting is expected to address requests for exemptions from or adjustments to certain performance criteria, as well as conduct monetary policy consultations. It will also review the second review under the Flexible and Sustainable Facility (FSFF) program, which contributes an additional $1.6 billion to the total disbursement. As the CBE prepares to receive the funds, the focus will likely shift to how the government plans to allocate the money. With inflation remaining elevated and global markets volatile, the success of the IMF program will depend on effective fiscal management and structural reforms aimed at enhancing economic resilience. The coming weeks will be critical in determining whether the new disbursements translate into meaningful progress for Egypt’s economy.