Since 2016, Egypt has repeatedly turned to the IMF for help. Under President Abdel Fattah El-Sisi, the country has inked back-to-back packages – from a USD 12 billion Extended Fund Facility in 2016 (which included a huge pound devaluation and subsidy cuts) to emergency loans in 2020 (amid COVID) and again a multi-year EFF beginning in late 2022.
Each programme has aimed to stabilise the economy, rebuild dwindling foreign reserves, and stop unsustainable debt, but each has been followed by fresh imbalances. As one report notes, Egypt “has taken on back-to-back financing facilities with the IMF since 2016…to resuscitate its economy after years of turmoil.”
Chronic budget deficits (largely caused by generous fuel, electricity, and food subsidies) and external shocks (tourism declines, the Ukraine war’s impact on wheat imports, Red Sea trade disruptions, etc.) have repeatedly left the pound short of dollars, forcing Egypt to seek IMF lifelines.
The conditions attached to each bailout have been familiar: move the pound toward a market rate, trim subsidies and ration public spending, and strengthen revenues. In 2016, for example, Egypt floated the pound and sharply raised VAT.
During the pandemic, it used a quick IMF line (RFI/SBA) to cope with the downturn. But by late 2022, rising inflation (partly from prior devaluations), a war-driven spike in commodity prices, and falling Suez Canal revenues prompted a new programme. That 2022 deal was a 46-month Extended Fund Facility of about USD 3 billion, conditioned on more subsidy cuts and structural reforms. Even so, strains persisted, and by early 2024, Egypt requested an expansion of its arrangement.
In March 2024, Cairo struck an expanded IMF deal worth USD 8 billion (plus a separate USD 1.2 billion climate “Resilience and Sustainability” loan). This followed the central bank’s decision to finally “unshackle” the pound from its pegs, allowing it to plunge to around EGP 50 = USD 1 from roughly 30, while hiking rates to nearly 28%. Investors had been spooked by a chronic forex shortage, and the sharp float – a key IMF demand – helped convince the Fund to unlock the expanded package.
As Al Jazeera reports, Egypt “sharply depreciate\[d]” the pound and agreed to raise its tax-to-GDP ratio and sell more state assets to create buffers. In short, the 2024 deal built on the 2022 loan, effectively adding more tranches to cover a deepening crisis.
Egypt and IMF officials insist these measures are beginning to pay off. The Fund’s latest mission in May 2025 concluded that Egypt has made “substantial progress toward macroeconomic stability,” with growth now expected at about 3.8% in FY2024/25. Public investment is better targeted, and new tax reforms are starting to yield revenue.
Inflation, though still high (about 16–17% in mid-2025), has come down from the 38% spike of late 2023, allowing the central bank to cut rates by a couple of percentage points. Authorities have also expanded social safety nets: the IMF notes that cash transfers (the Takaful/Karama programme) now cover over 5 million households, and an EGP 180 billion package was announced in early 2024 that raised the minimum wage and gave bonuses to teachers and health workers. As the IMF’s FAQ explains, the idaea is to “protect macro stability” while shielding the poor and middle class from soaring prices.
At the same time, many Egyptians are feeling the pinch. Inflation has eroded incomes, and subsidy cuts have raised living costs. For example, a late-2024 budget decision abruptly ended a long-standing bread subsidy, causing bread prices to jump by about 400% overnight – a hike not imposed by the IMF but driven by domestic policy to “redefine the social contract.”
Fuel prices have been increased several times (a 15% increase in April 2025 marked the fifth hike in 18 months) to meet IMF cost-recovery targets. Reuters notes that authorities are aiming to phase out fuel subsidies entirely by the end of 2025.
These measures, plus earlier devaluations, mean that most Egyptians have endured a volatile cost-of-living shock. A Guardian report in 2023 warned that two-thirds of the population were already “struggling with falling living standards,” many scrambling for second jobs and cutting back on basics.
Poverty is estimated at roughly 30% (higher if inflation were fully accounted for), and even middle-class families complain of savings halved by the pound’s collapse. While Egypt’s security state has suppressed large protests, isolated incidents (and private complaints) suggest growing discontent over inflation and cuts.
The IMF-backed reforms have potential upsides. By unifying exchange rates and tightening fiscal policy, the government has begun to rebuild confidence. Egypt’s bond spreads have narrowed from their highs, and international partners (the UAE, World Bank, etc.) are more willing to lend or invest now that a Fund programme is in place. The IMF insists that lower inflation will eventually allow households to breathe easier, and that cutting broad subsidies frees up funding for health, education, and infrastructure.
Indeed, officials point out that some macro buffers have been refilled – foreign reserves are gradually recovering, and debt ratios (by IMF estimates) have edged down as GDP grows. Moreover, mandated reforms (more transparent SOEs, better tax administration, privatisations) could improve the long-term business climate.
But critics warn of significant drawbacks. Human rights and development groups have pointed out that as of early 2023, “soaring prices” were already squeezing millions of Egyptians, and that the IMF’s austerity focus risks undermining the poor.
They note that Egypt’s massive military-run economy and patronage networks have often escaped reform – even as ordinary people see rising inequality. For example, the authorities have raised civil servants’ wages sharply (to keep state employees quiet), but inflation still outstrips pay increases for most.
In short, the old critique resurfaces: each IMF rescue seems to require new cuts that fuel popular grievances and rumours of “reform fatigue.” Many Egyptians grumble that the promised benefits – vibrant growth and jobs – are slow to materialise, while the pain (from inflation and lost subsidies) is immediate.
In sum, Egypt’s ongoing IMF saga remains a delicate balancing act. Policymakers contend that the reforms are necessary medicine: only by showing fiscal discipline and a market-based approach can Egypt unlock foreign investment and eventual growth.
They tout the expanded cash transfer programmes and planned social spending as evidence that the burden on the most vulnerable will be mitigated. International analysts are cautiously hopeful that a stabilised pound and disciplined budget could put Egypt on firmer footing, but many stress that without deeper structural and political reforms, the country may just be caught in a cycle of IMF support.
As one IMF official put it, lowering inflation is the first step to restoring prosperity for all Egyptians, but it must go hand in hand with inclusive growth measures. Otherwise, critics argue, Egypt risks trading short-term bailouts for long-term public frustration over rising prices and inequality.