IMF Praises Egypt's Reform Progress Despite a Challenging External Environment

Taline Koranchelian, Deputy Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), said Egypt has made significant progress in its economic reform and stability program despite a challenging external environment, during an online press conference held by the IMF on Thursday, October 15, according to a report by Arab Finance.

Koranchelian explained that Egypt's reform program, supported by the Extended Fund Facility (EFF), helped the country reduce external imbalances, enhance exchange rate flexibility, achieve fiscal discipline, and restore investor confidence. She added that sustaining these gains requires continued cautious policies and structural reforms to bolster private-sector activity.

For his part, Jihad Azour, the IMF's Director for the Middle East and Central Asia, said the Fund has approved around $48 billion in financing for countries across the Middle East and Central Asia region since 2020. He projected that growth in the Middle East, Central Asia and Pakistan region would decline from 3.3% in 2025 to a contraction of 1.3% in 2026, before rebounding to 6.6% in 2027, with a sharp contraction in the economies of oil-exporting countries during 2026.

Azour urged policymakers to prioritize price stability, focus on rebuilding reserves, and enhance resilience against future shocks. He said the outlook depends critically on how quickly energy production and trade normalize, and on countries' ability to preserve macroeconomic stability, speaking at a news conference during the annual meetings of the IMF and World Bank in Bangkok.

What do these terms mean?

Extended Fund Facility (EFF): A financing program from the IMF that grants a country medium-term loans in exchange for implementing economic reforms.

External imbalances: A mismatch in a country's transactions with the rest of the world, such as a large trade or current-account deficit.

Exchange rate flexibility: Allowing a currency's exchange rate to move with supply and demand instead of fixing it, which helps absorb external shocks.

Foreign reserves: Hard-currency assets held by the central bank to meet crises and cover imports.