Managing Public Finances with Significant Flexibility to Stimulate Economic Activity and Drive Growth, While Maintaining Fiscal Discipline and Reducing Debt

The Ministry of Finance affirmed that its fiscal policy priorities support and complement Egypt’s broader economic strategy aimed at stimulating investment, growth and employment, emphasizing that public finances are being managed with significant flexibility to stimulate economic activity and drive growth, while maintaining a commitment to fiscal discipline and debt reduction.

In a statement issued following S&P Global Ratings’ affirmation of Egypt’s ‘B/B’ credit ratings with a stable outlook, the ministry said it would work to increase foreign direct investment inflows, diversify the sources of economic growth and boost exports of goods and services.

 It noted that proactive and consistent policies strengthen the Egyptian economy’s ability to withstand the repercussions of regional crises.

The ministry added that the stable outlook reflects a balance between growth prospects and sustained momentum in economic reforms over the medium term.

 It pointed out that manufacturing, telecommunications and tourism are driving economic growth, with the growth rate reaching 5.1% in fiscal year 2025/2026.

The ministry stressed that the private sector is regaining momentum and strength, accounting for 65% of total investment and recording high growth rates.

 It highlighted that S&P Global Ratings’ report anticipates further growth as policies aimed at stimulating economic activity, simplifying procedures and enhancing predictability continue.

The ministry explained that the primary surplus reached 4.9% of GDP, while the overall budget deficit narrowed to 5.8% of GDP during the past fiscal year, despite the numerous challenges faced. 

It emphasized that tax facilitation measures helped increase the tax revenue-to-GDP ratio to 13% in the past fiscal year without imposing additional burdens.

The ministry further noted that rising debt-servicing costs and financing needs pose challenges to public finances, but said the situation would improve significantly as interest rates decline.

 It explained that exceptional revenues are being directed immediately towards accelerating the implementation of the government’s debt reduction plan and lowering the government debt-to-GDP ratio.

The ministry also highlighted its target of reducing government debt to 78% of GDP by June 2027 and cutting external debt by approximately $1 billion to $2 billion annually. It reaffirmed its commitment to continuing social protection programs that are more effectively targeted towards eligible beneficiaries and the unprivileged segments.