Egypt has made notable strides in strengthening its economy, and the International Monetary Fund (IMF) continues to support the country’s journey toward lasting macroeconomic stability. Simultaneously, the IMF stresses that expanding the nation’s tax base is crucial for maintaining and extending these achievements.
In a recent review, led by IMF Mission Chief Vladkova Hollar, Egypt’s economic efforts were recognised for their positive progress. The mission was part of the sixth review of Egypt’s $8 billion financial support arrangement approved in March 2024. This review underscores the ongoing commitment between Egypt and the IMF to foster economic resilience.
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Steady Progress and Positive Outlook
Hollar praised Egypt’s efforts, stating, “Egypt has made substantial progress toward macroeconomic stability.” She highlighted that the country’s economy is expected to continue its upward trajectory, with the IMF upgrading its growth forecast for the fiscal year 2024/25 to 3.8%, reflecting the stronger-than-anticipated performance in the first half of the year.
Reforms and International Support
Egypt’s commitment to reform has been demonstrated through significant policy measures. In 2024, the country took bold steps, including raising fuel prices—a move aligned with IMF-backed reforms first pledged over a year earlier. Additionally, Egypt devalued its currency by more than 35%, a strategic step to improve competitiveness and fulfil IMF conditions.
In support of these efforts, the IMF approved an additional $5 billion augmentation to Egypt’s existing loan package, bringing total financial assistance to $8 billion. These funds are crucial in helping Egypt recover from a prolonged economic downturn marked by strained foreign reserves, a weakened currency, and rising inflation.
Signs of Stabilisation
Recent economic data point toward gradual stabilisation. Egypt’s inflation rate decreased to 12.8% in February 2025 from 24% in January, marking the lowest level since 2022, when the country faced a recession driven by foreign currency shortages and an underground dollar market. The easing inflation reflects the success of stabilisation measures, including improved oversight of infrastructure projects and efforts to modernise economic institutions.
The Road Ahead: Expanding the Tax Base
While recent improvements are promising, the IMF underscores that sustainable growth depends on strengthening Egypt’s fiscal foundation. Central to this is the expansion of the tax base. A key policy priority is the decisive reduction of the public sector’s role in the economy.
Implementing the State Ownership Policy and advancing the asset divestment program in sectors where the government has committed to reducing its footprint are seen as vital steps in strengthening the private sector’s role. These measures are expected to improve the business environment, boost private sector contributions to growth, and foster a more resilient economy.
Egypt’s economic recovery is gaining momentum, supported by both internal reforms and international assistance. As the country continues to implement structural reforms—especially in revenue generation—it can strengthen its fiscal health and lay a solid foundation for sustained growth. Widening the tax base and addressing fiscal inefficiencies will be central to Egypt’s efforts to secure a resilient and prosperous future.
