IMF mission arrives in Cairo as Egypt seeks to unlock $2.5 billion in delayed funding

Cairo hopes successful reviews will release funds and bolster investor confidence after two years of economic turbulence

An IMF delegation has arrived in Cairo. The funding reviews were delayed amid concern over the pace of structural reforms. AP

Egypt’s long-delayed loan programme could be revived, unlocking about $2.5 billion in funding before the end of the year, as an International Monetary Fund mission arrives in the country for an 11-day visit.

The delegation, which reached Cairo on Monday evening, will carry out the fifth and sixth reviews of Egypt’s Extended Fund Facility simultaneously, state media reported. The two reviews have been delayed for months amid IMF concern over the pace of structural reforms and the state’s slow withdrawal from commercial activity. The fifth review was originally scheduled for June.

If completed successfully, the mission’s work would pave the way for a new disbursement consisting of about $1.2 billion from the main IMF programme and a further $1.3 billion from the Resilience and Sustainability Facility.

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Shoppers at a market in Cairo. Egypt's budget deficit widened to 3.2 per cent of GDP in the first four months of 2025-2026. EPA-EFE

Egypt’s loan arrangement was expanded in March 2024 to $8 billion under the EFF, from $3 billion earlier, along with an additional $1.2 billion from the newer facility, bringing the total package to roughly $9.2 billion. So far, the country has received about $3.2 billion.

During the visit, IMF officials will meet senior members of the economic team to judge Egypt's progress in liberalising its exchange rate, cooling inflation, streamlining state spending and, most importantly, opening the way for private investors.

The fund has repeatedly emphasised that durable growth in Egypt will hinge on the state stepping back from commercial ventures and transferring a larger share of investment activity to the private sector.

Renewed reform push

On the eve of the mission’s arrival, Egypt’s Prime Minister Mostafa Madbouly chaired a meeting with the ministers of planning, finance and investment, announcing that the government had begun updating its State Ownership Policy – a key benchmark under the IMF programme. The Prime Minister said the review would evaluate the implementation of previous commitments and adjust targets to match current economic conditions.

A newly established State-Owned Enterprises Restructuring Unit has also been tasked with supervising asset sales and accelerating the privatisation process.

According to a cabinet statement issued on Monday, the updated plan rests on four pillars: strengthening the new unit’s role, expanding the use of the Sovereign Fund of Egypt, increasing private-sector participation and enforcing transparent governance of state assets.

The government hopes the moves will help convince the IMF that its privatisation agenda has regained momentum after several years of delays.

Signs of stabilisation

Egypt has recorded some improvement in several macroeconomic indicators. Inflation, which reached about 38 per cent in late 2023, has slowed markedly. Although inflation rose slightly in October to 12.5 per cent, from 11.7 per cent in September, the broader trend remains downward.

The Suez Canal – a critical source of foreign currency – has also begun to recover after a steep decline in revenue caused by Houthi attacks on Red Sea shipping from late 2023 through most of 2025. The attacks forced global shipping lines to reroute around the Cape of Good Hope, costing Egypt an estimated $8 billion in lost canal income, President Abdel Fattah El Sisi said last week.

A ship passes through the Suez Canal, Egypt. Canal revenue rose 14.2 per cent year-on-year between July and October as some shipping lines returned. Reuters

A stronger signal of renewed confidence came with last week’s visit by Vincent Clerc, chief executive of Danish shipping giant Maersk, to the canal city of Ismailia. He signed a strategic partnership agreement with Suez Canal Authority chairman Admiral Osama Rabie, saying the company was encouraged by progress in the Gaza peace process and improving security in the Bab Al Mandeb strait.

However, Mr Clerc stressed that Maersk would resume canal transits only when conditions are deemed safe. The Suez Canal Authority later suggested Maersk traffic could partially resume in December, although the company has not confirmed that.

The authority's data shows canal revenue rose 14.2 per cent year-on-year between July and October as some shipping lines returned.

Challenging fiscal picture

Budget data paints a more complex picture. According to EFG Hermes, Egypt’s budget deficit widened to 3.2 per cent of gross domestic product in the first four months of financial year 2025-2026, from 2.6 per cent a year earlier, driven largely by a 54 per cent surge in interest payments to nearly 0.9 trillion Egyptian pounds ($21 billion). Revenues rose 33 per cent to 0.86 trillion pounds, but spending climbed faster, reaching 1.51 trillion pounds.

Interest payments now account for about 60 per cent of government expenditure, up from 53 per cent last year, and the interest-to-revenue ratio remains near 90 per cent. The primary surplus, however, improved to 1.1 per cent of GDP from 0.7 per cent due to stronger tax revenue and tighter control of non-interest spending. Tax receipts rose 35 per cent year-on-year to 756.7 billion pounds, representing nearly 88 per cent of public income.

Analysts expect some temporary relief later in the year as revenue strengthen during tax season and Cairo receives additional foreign currency inflows, including a $3.5 billion land sale payment from Qatar linked to a major North Coast development.

Tourism continues to bolster the outlook. Arrivals reached 15.6 million between January and October, up 21 per cent year-on-year, with further growth anticipated following last month’s long-awaited opening of the Grand Egyptian Museum.

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Investor sentiment has also been lifted by new Gulf commitments. In late November, Egypt signed a $29.7 billion agreement with Qatar’s Qatari Diar to develop a high-end coastal city spanning seven kilometres along the Mediterranean – the largest Qatari investment in Egypt to date and part of a $7.5 billion package announced in April.

For Egypt, the IMF visit is a critical test of its commitment to reform and its ability to navigate a heavy debt burden while maintaining signs of recovery.

If both programme reviews are completed successfully, the resulting $2.5 billion disbursement will strengthen reserves and signal renewed confidence from international lenders, a step the government hopes will keep the fragile rebound on track in 2026.