The Economic Pulse

Egypt is recalibrating its economy after securing a global bailout of approximately $57 billion, led by the IMF and United Arab Emirates, providing a pathway out of its worst economic crisis in decades. The IMF Executive Board recently completed the third review of Egypt's USD 8 billion loan program, enabling the government to draw the USD 820 million third tranche. This agreement, reached last month, faced a delay as the board reviewed the new government's approach to fuel subsidies, which were subsequently raised.

Egypt has seen notable developments in inflation and interest rates. According to CAPMAS, urban inflation decreased to 27.5% in June from 28.1% in May, despite a modest increase in food inflation. Reflecting a cautious approach to ongoing inflationary pressures, the Central Bank of Egypt (CBE) has maintained interest rates at their current levels.

As part of its economic reforms, the government raised prices for a wide range of fuel products by up to 15%, the latest trimming of state subsidies following the new pact with the International Monetary Fund. Despite four consecutive months of inflation decline, interest rates are expected to remain above the CBE's target range of 7-9% until the end of 2025, with an anticipated annual rate of 26% by year-end.

As of May 2024, the debt has decreased to $153.86 billion, down from $168.03 billion in December 2023, marking a reduction of approximately $14.17 billion or 8.43%, the largest in Egypt's history.