Egypt raises rates 100 basis points with six weeks left on its IMF programme

The Monetary Policy Committee of the Central Bank of Egypt raised key policy rates by 100 basis points on Thursday 29 October, taking the deposit rate to 20 percent and the lending rate to 21 percent. The Egyptian outlet Zawia3 reported it as the first increase since March 2024 and as a decision that ran against market expectations; the figures are corroborated by the aggregator Rio Times, which restates other outlets' reporting rather than producing its own. The MPC’s own statement has not been reviewed for this edition, and the bank’s stated reasoning is therefore not characterised here. On 30 October a food-industry figure named as El-Damati said the increase could cost the budget around $2.7bn and put the pound at roughly 56 to the dollar; that is an industry estimate of debt-service cost, carried by an aggregator, and it is not an official number.

The timing is the substance. The IMF Executive Board completed the seventh review under the Extended Fund Facility and the second under the Resilience and Sustainability Facility in late August, in Country Report No. 26/224. Manassa, reading that document, reports the eighth and final review is expected in November and puts Egypt’s external financing need for the fiscal year at $9.7bn: $3.0bn from the Fund, $3.5bn from the European Union, $1.0bn from the World Bank, and $1.8bn from sources the Fund did not identify. Bloomberg reported on 15 October that the Fund would open talks on the final review after the annual meetings and aimed to sign off by December, citing a senior official. The programme was approved in December 2022.

Beneath that sits the deposit question. Staff work from the fifth and sixth reviews records firm assurances that $18.3bn in GCC official deposits at the Central Bank will not be withdrawn before the EFF concludes in December 2026, except for equity purchases, with foreign-exchange proceeds retained in reserves. The standstill is written to the life of the programme. The New Arab reported on 22 September that Cairo and Riyadh were negotiating the future of a $5.434bn Saudi deposit, quoting a banker named Al-Nahhas saying the absence of agreement on a first tranche — more than half the total — weeks before it fell due was causing concern in the banking sector. That report is six weeks old and single-outlet; whether the tranche rolled, converted or was repaid has not been established.

Assessment: Read the hike against the calendar rather than against the price level. Egypt is tightening while reserves sit at $57.3bn, remittances hit a record $47.3bn in FY2025/26 and banking-sector net foreign assets reached a six-year high — a combination that only reconciles if short-term money is leaving, and that explanation currently rests on one industry voice in one aggregator. Treat it as a hypothesis. The harder fact is contractual: the no-withdrawal assurance and the programme expire together, and nothing published establishes what governs $18.3bn of Gulf money on 1 January 2027. The $1.8bn the Fund declines to name in its own staff report is the same question in smaller print.