An International Monetary Fund (IMF) staff team, led by Ms. Vladkova Hollar, conducted a mission to Cairo from May 6 to May 18. The purpose of the visit was to engage in discussions with Egyptian authorities on economic and financial policies related to the Fifth Review under the Extended Fund Facility (EFF) arrangement.
Ms. Vladkova Hollar stated, "The Egyptian authorities and IMF staff held constructive discussions which have advanced the technical work and policy discussions as part of the Fifth Review under the Extended Fund Facility."
Egypt has reportedly made significant progress towards macroeconomic stability. Growth is projected to strengthen further, with an upgraded forecast for FY24/25 at 3.8 percent due to better-than-expected performance in the first half of the year. Private investment's share in total investment increased significantly from 38.5 percent in H1 FY23-24 to nearly 60 percent in FY24-25. Inflation rose slightly to 13.9 percent in April but remains on a downward trend.
The current account remains wide because of rising imports, reduced hydrocarbon output, and disruptions in the Suez Canal, which offset strong tourism, remittances, and non-oil exports. Greater fiscal prudence is being exercised through improved oversight and control over large public sector infrastructure projects.
"We welcome the authorities’ recent efforts to modernize and streamline tax and customs procedures," Ms. Vladkova Hollar noted, adding that these reforms are beginning to show positive results.
The IMF emphasized that deeper reforms are essential for Egypt to unlock its growth potential and create high-quality jobs while reducing vulnerabilities and increasing resilience against shocks.
"In order to deliver on these objectives," Ms. Vladkova Hollar said, "decisively reducing the role of the public sector in the economy and leveling the playing field for all economic agents should be key policy priorities."
Efforts need continued focus on improving Egypt's business environment alongside implementing State Ownership Policy and asset divestment programs where state involvement is set to decrease.
"We are grateful for the warm hospitality extended by the authorities during this mission," she concluded, indicating that virtual discussions will continue to finalize agreements on remaining policies needed for completing the fifth review.