IMF’s New $1.2B Lifeline for Egypt’s Recovery
By Darius Spearman (africanelements)
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Egypt’s IMF Bailout Fuels Structural Overhaul
The International Monetary Fund greenlit $1.2 billion for Egypt this month, marking its largest disbursement since the $8 billion Extended Fund Facility began in 2022. This injection brings total IMF support to $3.2 billion, aimed at stabilizing Africa’s second-largest economy amid currency shortages and inflation topping 30% (Egypt Today). The funds follow Egypt’s compliance with fiscal tightening measures, including subsidy cuts and privatization of state-owned hotels.
Structural reforms are now accelerating. Authorities must reduce the military’s economic footprint while boosting private sector participation—a delicate pivot requiring political resolve. Meanwhile, recent Suez Canal revenue declines (50% since 2023) heighten urgency for diversified growth engines beyond tourism and hydrocarbons (IMF Report).
Economic Headwinds Test Reform Resolve
Egypt’s GDP growth slowed to 2.4% in FY2023/24—its weakest pace in a decade—before rebounding to 3.5% this fiscal year. Inflation remains stubborn at 26% despite central bank rate hikes to 21.25% (IMF Report). The current account deficit ballooned to 5.4% of the GDP as foreign reserves dipped below $35 billion. Consequently, the Egyptian pound has lost 50% of its value since 2022, exacerbating import costs.
Authorities counter these pressures through fiscal discipline. The primary balance improved to 2.5% of the GDP in 2024, with plans to hit 4% by 2026. Yet social stability risks loom. Bread subsidy costs surged 127% this year, while 30% of Egyptians live below the poverty line (IMF Video Briefing).
Privatization Drive Reshapes Key Sectors
Egypt plans to sell $6 billion in state assets by 2025, including stakes in telecom giant Telecom Egypt and three military-owned hotels. This divestment push aims to trim public debt, which hovers near 93% of GDP, while attracting foreign investment (Egypt Today). The government has already raised $1.9 billion from selling shares in 35 companies since 2022.
Critics warn privatization could deepen inequality if not paired with social safeguards. The IMF, however, emphasizes market liberalization as critical for long-term growth. Future reforms target energy subsidy reductions and VAT base expansion—measures projected to save $4.7 billion annually by 2026 (IMF Report).
ABOUT THE AUTHOR
Darius Spearman has been a professor of Black Studies at San Diego City College since 2007. He is the author of several books, including Between The Color Lines: A History of African Americans on the California Frontier Through 1890. You can visit Darius online at africanelements.org.
