Egypt Targets Reducing Public Debt to 78% of GDP - Sarmad

The Egyptian Ministry of Finance confirmed its target to reduce public debt to 78% of GDP by June 2027, coinciding with Standard & Poor’s reaffirmation of Egypt’s economic credit rating. The ministry emphasized that fiscal policy priorities support and align with the economic trajectory aimed at stimulating investment, growth, and employment in Egypt. It noted that public financial management is being conducted with considerable flexibility to spur economic activity and drive growth, while adhering to a path of fiscal discipline and debt reduction.

In a statement issued on Saturday, the Ministry of Finance said that following Standard & Poor’s decision to maintain Egypt’s rating at B/B with a stable outlook, the country would work to increase foreign direct investment inflows, diversify the growth structure, and boost exports of both goods and services. It highlighted that proactive and consistent policies enhance the Egyptian economy’s capacity to absorb the repercussions of regional crises.

The ministry added that the stable outlook reflects a balance between growth prospects and the continued momentum of economic reforms over the medium term. It pointed out that manufacturing, telecommunications, and tourism sectors are leading growth rates, which are projected to reach 5.1% during the 2025-2026 fiscal year.

The ministry affirmed that the private sector is regaining its activity and strength, accounting for 65% of investments and achieving high growth rates. It noted that Standard & Poor’s report anticipates further growth as stimulus and simplification policies continue, alongside increased certainty.

The ministry clarified that the primary surplus reached 4.9% of GDP, while the overall deficit declined to 5.8% of GDP last year despite all challenges. It stressed that tax incentives contributed to increasing the ratio of tax revenues to GDP to 13% in the previous fiscal year, without imposing additional burdens.

The ministry added that rising debt service costs and financing needs pose challenges to public finances, but conditions will improve significantly with lower interest rates. It explained that exceptional revenues are being directed specifically to accelerate the government’s debt reduction plan relative to GDP.

The ministry indicated that it aims to reduce debt to 78% of GDP by June 2027 and decrease external debt by approximately $1-2 billion annually. It noted that the country continues to implement social protection programs that are more targeted toward eligible beneficiaries and those in need of priority care.