IMF approves $1.2 billion for Egypt after fourth review

The International Monetary Fund approved the disbursement of $1.2 billion to Egypt following completion of the fourth review of the country's $8 billion economic reform programme, after allowing Egypt to waive a primary budget surplus target.

The IMF's executive board also approved Egypt's request for an arrangement under the resilience and sustainability facility with access to about $1.3 billion, the lender said in a statement. Cairo first requested financing under the facility in 2022.

"The Executive Board approved the authorities’ request to recalibrate the authorities’ medium-term fiscal commitments," the statement said. "In particular, the primary balance surplus (excluding divestment proceeds) is expected to reach 4% of GDP next fiscal year," it said. The 2025/26 fiscal year begins on July 1.

The primary surplus was 0.5% of GDP less than Egypt's commitment earlier in its IMF programme, the statement added.

Egypt, which has been grappling with high inflation and shortages of foreign currency, agreed to the IMF programme in March 2024. 

A sharp decline in Suez Canal revenue caused by regional tensions over the past year and diminishing production of natural gas have compounded its economic woes.

Egypt on Monday reported annual headline inflation almost halved in February, helped by financial reforms taken as part of the IMF financial support agreement. Annual urban consumer price inflation decreased to 12.8% in February from 24.0% in January.

The IMF's approval of the fourth disbursement and the resilience and sustainability facility financing are likely to help Egypt roll over around $20 billion in domestic treasury bills which mature this month, analysts and bankers said. Many of the T-bills are held by foreign investors.