The IMF said macroeconomic conditions in Egypt have improved since the program's first and second reviews in March, noting that inflationary pressures are gradually abating, foreign exchange shortages have been eliminated, and fiscal targets have been met.
However, the IMF warned that the regional environment remains difficult and that domestic policy challenges require decisive action.
The challenging regional environment, including "the conflict in Gaza and Israel and tensions in the Red Sea, as well as domestic policy and structural challenges," necessitate continued implementation of program commitments, the IMF said in a report.
It recommended continued fiscal consolidation, enhanced revenue mobilization, and accelerated structural reforms to boost private sector growth.
This tranche is part of an extended 8 billion U.S. dollar loan agreement finalized between Egypt and the IMF in March to help the country address the mounting impact of regional tensions on its macroeconomy.
The loan arrangement, which began in December 2022, is scheduled to conclude in September 2026, according to Egypt's Ministry of Finance.
Over the past two years, the U.S. dollar shortage in Egypt has led to the devaluation of the local currency and the emergence of a parallel currency exchange market, plunging Egypt into one of its worst economic crises.
The crisis has been further exacerbated by the Gaza conflict that erupted last October, impacting Egypt's tourism sector and halving its revenues from the Suez Canal.
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