Egypt’s economic growth is set to be slower than expected this year after an $8 billion agreement was signed with the IMF in March, according to a Reuters poll of 17 economists. Gross domestic product (GDP) is now forecasted to grow 4%—down from a previous 4.35%.

Why it matters: The tighter fiscal and monetary policy and a weakened pound after the IMF agreement has significant impact on economic growth. “The overall net impact is that economic growth will be weaker this fiscal year,” said James Swanston of Capital Economics. “But there are reasons to be more optimistic on GDP growth from FY 2025 and 2026 onward.”

Yes, but: In the energy and fuel sector, Egypt must raise fuel prices to fulfill their economic reform condition set by the IMF. Because of this, gas will cost up to 15% more. Egypt introduced an initial round of price hikes in March of this year to bring domestic prices back in line with others in international markets, but hopes to remove all fuel subsidies by the end of 2025, according to government spokesperson Mohamed el-Homossan.

This decision was made as Egypt fights its worst economic crisis in more than a decade. Ballooning foreign debt is a key driver in inflation—causing consecutive devaluations of the local currency.

Other outstanding factors contributing to Egypt’s economic volatility include:

• Regional tensions. Wars in neighboring countries Gaza and Sudan, as well as attacks by Yemen’s Houthis on shipping around the Red Sea have hit revenues from Egypt’s Suez Canal (recording a 23.4 percent drop in the 2023-24 fiscal year compared with the previous one.)
• Global shocks. The Russian invasion of Ukraine, global monetary tightening, and Middle Eastern conflict have made pre-existing imbalances worse.
• Social unrest. Unrest related to unemployment, low purchasing power, currency depreciation and misalignment with other Arab countries over Israel and the protection of Palestinians can potentially trigger revolts and institutional changes, per Allianz.

By the numbers: Customers in Egypt have averaged 54 days beyond terms, with 75% of credit professionals saying payment delays have increased, per the FCIB Credit and Collections Survey. The most common causes for payment delays are inability to pay, supply chain shipping issues and cash flow issues.

What FCIB Credit and Collections Survey respondents are saying:

• “Obtain financial statements on your customers and backstop sales with credit insurance.
• “It is important to know customer’s payment process to avoid misunderstandings or delays due to administrative issues.”
• “Don’t start the work unless the contract is signed and request at least 10% to 15% advance payment to secure the payments delay and stop the work when you can.”
• “Ensure there are no issues securing funds.”