Arab Republic of Egypt: Selected Issues

International Monetary Fund

No 2025/187, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues assesses the macroeconomic and environmental effects of climate mitigation policies in Egypt. The paper focuses on removing fossil fuel subsidies and ramping up renewable energy investments. Egypt’s transition to a low-carbon economy presents a significant opportunity for both mitigation and economic growth. By implementing a combination of fossil fuel subsidy removal and scaled-up investments in renewable energy, Egypt can achieve its ambitious mitigation targets while unlocking substantial economic gains. Properly pricing fossil fuels and effectively channeling the generated revenues—such as using at least 50 percent to reduce the budget deficit—can create fiscal space, enhance economic efficiency, and promote private sector investment. With these measures, Egypt stands to realize gross domestic product gains of up to 7.3 percent by 2030 and 13.8 percent by 2040, demonstrating that climate action can drive sustainable development and long-term economic resilience.

Keywords: B. General government debt profile; debt anchor; IMF-Env model Calibration; I. IMF-Env model description; anchor for MEDIUM-TERM; Inflation targeting; Non-renewable resources; Energy subsidies; Renewable energy; Global; Middle East and Central Asia; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 45
Date: 2025-07-15
New Economics Papers: this item is included in nep-ara
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