In a strong signal of economic recovery, the International Monetary Fund (IMF) has raised its growth forecasts for Egypt for the current and next fiscal years, anticipating a significant acceleration that will push GDP growth beyond 5%, reflecting Egypt’s ability to regain economic momentum despite regional and global challenges.
Jump in Growth Projections
The IMF’s latest data show that Egypt’s GDP growth is expected to reach 5.4% in fiscal year 2026/2027, up from the 4.7% forecast in October. The Fund also revised the current fiscal year 2025/2026 forecast upward to 4.7%, compared with 4.5% previously, indicating a more optimistic outlook for the Egyptian economy.
Economic Upswing in Saudi Arabia and the Region
Alongside Egypt, the IMF also raised its forecast for Saudi Arabia, projecting growth of 4.3% in 2025, up from 4% in October, accelerating to 4.5% in 2026, a half-point increase over previous estimates.
These positive revisions for the region’s two largest economies also impacted the broader Middle East and North Africa, with the IMF lifting regional growth forecasts to 3.4% for 2025 and 3.9% for 2026, signaling a gradual upward trajectory despite global challenges.
Progress in Egypt’s IMF Reviews
In December, Egypt reached an agreement at the technical level with the IMF on the fifth and sixth reviews under the Extended Fund Facility (EFF) program, as well as the first review under the Flexibility and Sustainability program.
The agreement still requires approval from the IMF Executive Board and would unlock approximately $2.5 billion from the EFF, in addition to $274 million from the first tranche of the Flexibility and Sustainability program.
IMF mission chief Vladkova Hollar stated that economic stabilization efforts have yielded significant gains and that the Egyptian economy shows strong growth indicators despite regional and global uncertainties.
Accelerating Structural Reforms
The IMF emphasized the need to speed up structural reforms to empower the private sector, including advancing privatization programs, reducing the role of the state, and limiting state-owned enterprises’ expansion.
The Fund noted that the “Facilitate Resilience and Sustainability” reforms are progressing as planned, including initiatives in renewable energy and climate finance, alongside continued progress on other commitments.
Strong Economic Performance
The balance of payments also improved, with a narrowing current account deficit supported by continued strong remittances and tourism revenues, along with robust growth in non-oil exports. Foreign financing conditions strengthened in 2025, with non-resident investment in local debt instruments rising to around $30 billion.
Positive Fiscal Outlook
On fiscal matters, the IMF highlighted continued strong performance, with a primary surplus of 3.5% of GDP in 2024/2025, supported by revenue growth of 36% in the past fiscal year and 35% from July to November 2025/2026, driven by tax base expansion, improved voluntary compliance, and simplified exemptions.
However, the tax-to-GDP ratio remained at 12.2%, described by the IMF as “modest by international standards,” urging continued efforts to reduce the revenue gap and place public debt on a downward trajectory while protecting targeted social spending.
Strengthening Governance in the Banking Sector
The Fund stressed the importance of enhancing governance in the banking sector, given the substantial presence of state-owned banks. Improved governance supports efficient monetary policy transmission and boosts competition. The Central Bank remains committed to completing third-party audits to ensure adherence to best international practices.
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