Egypt’s “Resilient Economy”: What the Prime Minister Praises and Households Do Not Feel

Prime Minister Mostafa Madbouly said the latest IMF review confirmed that Egypt’s economy had become better able to withstand shocks. Reforms pursued since 2016—including exchange-rate liberalisation, energy-price changes and controls on public spending—were beginning to bear fruit, he said, pointing to stronger macroeconomic indicators, higher foreign-exchange reserves, relative currency-market stability and returning foreign inflows. Other indicators, however, show continuing pressure on households through food, housing and service prices, heavier debt-service burdens and declining purchasing power.

The IMF Executive Board approved access to approximately $1.8 billion following completion of the seventh Extended Fund Facility review and second Resilience and Sustainability Facility review. Total disbursements under the two arrangements reached approximately $7.3 billion.

Days after these remarks, the government announced another electricity-price increase, following years of higher fuel and public-service charges under its economic-reform programme. That raises a different question: can Egyptian households withstand shocks too, and why has the improvement praised by the IMF not reached ordinary citizens?

A more resilient economy: what do the numbers show?

The IMF assesses economic resilience through indicators including reserve adequacy, exchange-rate flexibility, financial stability, debt and debt-service capacity, fiscal discipline, sustainable foreign-currency earnings and the ability to restore growth after crises.

The Executive Board completed the seventh review under Egypt’s 48-month EFF arrangement and the second RSF review on July 30, 2026.

Completion enabled immediate access to SDR 1.11 billion (approximately $1.5 billion) under the EFF and SDR 200 million (approximately $272 million) under the RSF. Cumulative disbursements under both reached approximately SDR 5.4 billion, equivalent to $7.3 billion.

The IMF considered Egypt better positioned than in previous periods of external stress, citing growth, declining inflation and higher reserves. It linked the relatively contained impact of the Middle East war to exchange-rate flexibility, energy-price adjustments and budget-spending restraint.

Several macroeconomic indicators have indeed improved. But indicators affecting living standards have not improved at the same pace, revealing a tension between stronger headline economic measures and greater pressure on everyday life.

Foreign-exchange reserves rose from $15.33 billion at the end of 2014 to $56.3 billion at the end of July 2026—an increase exceeding $40 billion and a record level in the series cited.

Reserves fluctuated after the 2016 reforms: from $24.27 billion at the end of that year to $42.55 billion in 2018, then down to $40.06 billion in 2020 during the pandemic. They later recovered to $47.11 billion at the end of 2024, supported by exceptional inflows including Ras El-Hekma, increased IMF and development-partner financing and stronger expatriate remittances.

Remittances are a major foreign-currency source alongside tourism, exports and foreign direct investment. Their importance lies in recurring dollar inflows throughout the year, which banks can use to meet market demand, finance imports and fulfil external obligations.

After the March 2024 exchange-rate liberalisation, expatriate remittances rose to approximately $36.5 billion in 2024/25 from $21.9 billion the preceding year, an increase of 66.2%. In July–May 2025/26, they reached approximately $43.1 billion, up 31.2% compared with the same eleven months a year earlier. The original infographic contains conflicting values in its later years; the English table below uses the verified remittance series and specifies the partial period.

The Ras El-Hekma development agreement announced in February 2024 with UAE sovereign investment company ADQ provided another exceptional inflow. The $35 billion package comprised $24 billion in new financing for development rights and conversion of $11 billion in UAE deposits at Egypt’s central bank into investments within Egypt. These components are not both new cash inflows.

The report puts reserves at approximately $47.2 billion in June 2024, compared with around $35 billion in June 2023, attributing the rise primarily to the agreement. The precise June figure in the report should not be confused with the separately dated reserve observations in the graphic. Ras El-Hekma provided substantial dollars that eased foreign-currency shortages and accumulated demand.

Energy-price adjustments

The energy-price adjustments praised by the IMF form part of repeated increases since 2014. The Arabic text states that fuel prices rose three times in the first quarter of 2026, but the historical graphic does not substantiate three separate increases in that quarter. The report links the latest increase to the US–Israeli war on Iran and the interruption of Israeli gas deliveries before supplies resumed.

It connects the renewed supply crisis to a major Egyptian–Israeli gas agreement worth approximately $35 billion, saying the disruption came around two and a half months after the announcement. That interval is reported in the source text rather than independently established here. The agreement and renewed energy insecurity prompted political and parliamentary criticism.

MP Freddy El-Bayadi, deputy leader of the Egyptian Social Democratic Party, submitted an urgent parliamentary question to the prime minister and the petroleum and electricity ministers about preparedness, supply security and the economic effects of regional escalation involving Iran, Israel and the United States.

Economics professor and former supply minister Gouda Abdel-Khalek argues that claims of greater resilience following the seventh IMF review require a reading that goes beyond the financial indicators emphasised by the government and the Fund.

He tells Zawia3 that the war on Iran, supply-chain disruption, the closure of the Strait of Hormuz and repercussions for Egyptian energy represent external shocks to the economy.

References to exchange-rate flexibility, energy-price adjustments and deficit containment through restrained spending may appear neutral, he says, but they affect citizens directly. In Egypt’s case, exchange-rate flexibility has meant repeated depreciation of the pound and consequences for prices and purchasing power, rather than merely movement in both directions.

Currency depreciation redistributes income between people on fixed incomes and those better able to adjust earnings, he argues. Government and private employees and pensioners are directly affected by rising prices, while traders, self-employed professionals and others who can alter their charges have more room to protect their incomes.

Depreciation pushes the middle class and poorer people down the social ladder, Abdel-Khalek says, imposing a major cost when national security is understood broadly. The narrative of resilience therefore needs to be reconsidered from society’s perspective: some groups, as well as the government, benefited while others paid through mounting living costs.

On energy, he says the concept of subsidies needs scrutiny. The letter of intent preceding IMF borrowing includes a government commitment to periodically review energy prices in order to reduce subsidies.

He refers to the memorandum attached to the letter of intent, setting out specific policy commitments, dates and figures. The document is generally titled a Memorandum of Economic and Financial Policies; the Arabic interview calls it an economic and social policy memorandum. He says fuel-price adjustments take global oil-price movements into account.

A letter of intent is submitted by the country’s authorities, generally signed by the finance minister and central-bank governor, setting out policies they commit to pursue during a financing programme, including fiscal, monetary, exchange-rate and structural measures.

It forms part of the programme documentation, with implementation assessed in periodic reviews. Approval and fulfilment of programme conditions can enable agreed financing instalments.

Abdel-Khalek’s central objection is that Egypt does not import all the petroleum it consumes. In his estimate, approximately half its petroleum-product needs are imported and the remainder produced locally. He questions charging consumers a world-price-based cost for all consumption.

He calls that approach economically misleading: world-price charging, he argues, makes sense for a wholly imported product, but citizens should not bear the locally produced share on the same basis. In his view, such energy increases resemble an unfair tax because lower-income groups are affected most. This is his argument about pricing, rather than an established equivalence between administered prices and a formal tax.

He also argues that diesel increases—affecting taxis, buses and other transport—have outpaced increases for 95-octane petrol. He considers the distributional effect regressive: a heavier relative burden for poorer people and a smaller one for higher earners.

Mohamed Ramadan, an economic researcher at EIPR, says implementing IMF-agreed measures such as exchange-rate flexibility and higher energy prices does not necessarily mean the economy has become more capable of surviving shocks.

These are elements of a reform programme, he says, but are insufficient on their own. Recent regional events rapidly affected the currency and then inflation, demonstrating, in his assessment, that major vulnerabilities remain.

The IMF itself continues to call for structural reforms, Ramadan adds, including state divestment, improved competition and transparency, and a smaller state economic role. Delays in these reforms constrain more sustainable growth.

Improved macroeconomic figures do not automatically improve daily life. People will feel reform when real incomes and purchasing power rise, he says. Continuing price increases and depreciation’s inflationary effects reduce the everyday benefits of stronger aggregate indicators.

The character of growth matters as much as its rate. Manufacturing and agricultural growth affect employment and income differently from property- and construction-led growth. Whether citizens benefit ultimately depends on how the proceeds are distributed.

Exchange-rate liberalisation and its economic effects

Abdel-Khalek traces the current reform relationship with the IMF to the 2016 agreement for $12 billion in financing, tied to government policy commitments.

Before the November 2016 agreement, Egypt floated the pound—one of the key prior actions. The dollar, previously approximately EGP 8–9, soon cost around EGP 16–17 and later reached much higher official levels.

The pound has lost substantial value since 2016, alongside commitments to sell state assets, expand private investment, reduce the economic involvement of sovereign state bodies and cut subsidies. Abdel-Khalek says he warned against flotation and proposed an alternative route to raising the $12 billion, but the government did not adopt his proposal.

Depreciation directly increased the cost of government and private projects and production, especially in an economy heavily dependent on imported inputs.

His preferred solution is not to freeze the exchange rate but to secure greater stability. That requires reviewing Egypt’s production structure, identifying strategically important gaps and directing investment to fill them, reducing the transmission of external shocks into the domestic economy.

He also calls for stronger links between sectors. Egyptian agriculture, he argues, depends less on domestic industry than fifty years ago, while industry relies less on local agricultural output. Declining cotton cultivation reduced cottonseed and hence oil production, he says, leaving Egypt dependent on imports for at least 80% of vegetable-oil consumption.

CBE figures cited in the report show external debt more than tripling over roughly twelve years, from $46.1 billion at the end of 2013/14 to $161.2 billion at the end of 2024/25—an increase of approximately $115.1 billion, or 250%. By the end of Q2 2025/26, it reached $163.9 billion, approximately $2.7 billion higher than at the previous financial-year end.

Government spending and budget restraint

Abdel-Khalek turns to public-spending containment, another element in the IMF’s assessment. He distinguishes social expenditure—education, healthcare and subsidies—from non-social spending on government administration and economic investment such as roads and bridges.

Restraint should apply to government as well as households, he says. A 10% wage increase against 15% price inflation, for example, leaves purchasing power lower. The example illustrates the relationship rather than establishing one uniform increase for all workers.

He criticises the cost of multiple government headquarters and meetings moving between cities, citing Garden City, the New Administrative Capital and El-Alamein among other locations. Citizens may not know the precise bill, he says, but it is not small in economic terms.

With more than thirty ministries, he argues, the government could reduce the number to approximately twenty through mergers or reorganisation, including energy, water, agriculture, culture and media portfolios. That could improve administration and lower costs.

Reducing ministries should not weaken the state, he stresses: government must remain present, effective and capable of oversight. Spending restraint should accompany protection for groups most affected by higher prices and depreciation.

The report traces minimum wages from EGP 2,000 a month in 2019 to EGP 7,000, with different implementation dates and coverage across sectors. It reports a further rise to EGP 8,000 for state administrative and government employees from July 1, 2026. This public-sector figure is not presented as a universal private-sector wage floor.

The Arabic text compares headline inflation of 3.1% and core inflation of 2.7% in 2019 with 14.3% for both in June 2026. The graphic specifies that its 2014–25 observations refer to August of each year, not annual averages. It shows headline inflation at 16.2% in August 2022, 35.8% in August 2023, 26.5% in August 2024 and 12.5% in August 2025. Different months should not be silently treated as identical observation periods.

Economic researcher Hassan El-Barbary explains that the principal indicators reported by CAPMAS and the CBE are monthly and annual inflation. Monthly inflation compares prices with the preceding month; annual inflation compares the same month in consecutive years.

A lower positive inflation rate does not mean prices have fallen, he tells Zawia3. A rate declining from 12% in January to 11% in February and 10% in March means prices are increasing more slowly.

A product rising from EGP 100 to EGP 150 and another rising from EGP 100 to EGP 120 both become more expensive; the rate of increase differs. Inflation describes changes in the price level. Negative inflation, unlike merely lower positive inflation, would indicate a fall in the relevant index.

Annual inflation similarly compares a month in 2026 with its counterpart in 2025, showing the year-on-year change and whether the pace of increases has accelerated or slowed.

Cumulative inflation is not usually announced as a separate headline measure, El-Barbary says, but can be calculated over a specified interval from the available indices, measuring the total change between a starting point and an endpoint.

It cannot be calculated by simply adding monthly rates. Three successive monthly increases of 10% do not equal a 30% cumulative rise, because each increase applies to the preceding month’s already increased price.

For example, EGP 100 becomes EGP 110, then EGP 121, then EGP 133.10: a cumulative increase of 33.1%. This measure is useful for understanding how living costs have changed over an entire period, rather than only how quickly they are changing at one moment.

Why do households not feel the resilience?

Economist Elhami El-Merghani doubts that claims of greater shock resistance reflect Egypt’s economic and social reality. Several fundamental indicators, he argues, still show structural imbalances.

He points to the continuing trade deficit, heavy debt service absorbing substantial budget resources, lower self-sufficiency in some crops, rising production costs and an unfair tax system as reasons to question the resilience narrative.

The test is how an economy handles repeated crises, rather than financial measures alone, he says. Egypt was affected by the pandemic, Russia’s war on Ukraine, the war in Gaza and subsequent regional tensions. In his assessment, each was followed by measures imposing additional burdens on citizens.

He considers the IMF primarily concerned with financial stability and the state’s ability to pay debt principal and interest, rather than living standards. Delayed reviews also reflected demands for further reforms, including faster asset sales, exchange-rate liberalisation and subsidy reduction.

Everyday welfare is better captured by inflation, real wages, food and rent prices, electricity, water, gas and transport costs, and education and healthcare, he argues. Falling purchasing power, the removal of hundreds of thousands of families from ration-card support and higher living costs tell a different story from macroeconomic indicators.

In his view, productive sectors—especially agriculture and industry—continue to struggle while growth relies more on property and contracting. That limits improvements in employment, incomes and living standards.

Abdel-Khalek likewise argues that assessment should go beyond the government’s ability to raise finance or achieve financial stability to consider policy’s effects on society. The resilience conclusion welcomed by the government, he says, gives insufficient weight to social and economic consequences.

Higher-income groups can absorb price increases more easily, he adds, while fixed-income households, pensioners and wage earners face greater pressure from depreciation and inflation.

He argues that the government and IMF devote more attention to cutting bread, energy and other subsidies than to wasteful public spending. Government restraint should form a central part of reform alongside protection for groups most affected by price rises and depreciation.

For the experts interviewed here, resilience means more than securing dollars, repaying debt and complying with an IMF programme. It also requires a stronger productive base, protected purchasing power, more jobs, better market regulation and public-spending discipline, and meaningful oversight and accountability, including locally.

The question IMF reviews alone cannot answer remains: if Egypt is better able to withstand external shocks, when will that strength reach people’s lives—and make Egyptian families better able to bear the cost of reform?