Egypt: Egypt's Ministry of Finance has firmly rejected a recent report by an Arab news broadcaster concerning the nation's debt status, labeling it as 'misleading and unprofessional.' The ministry claims the report misrepresented the country's fiscal trajectory by focusing solely on new domestic debt issuances while ignoring crucial factors such as repayments, amortizations, and external debt, leading to an incomplete analysis.
According to State Information Service Egypt, the ministry criticized the report for suggesting a sharp rise in Egypt's local debt during the fiscal year 2025/26 without considering debt repayments or broader indicators like the declining debt-to-GDP ratio. The ministry highlighted improving investor sentiment, with Egypt's five-year credit default swap (CDS) spreads dropping to below 270 points as of January 6, 2026, the lowest since 2020. Additionally, yields on Egypt's international bonds have decreased by 300-400 basis points compared to the same period in 2025.
The finance ministry emphasized its right to pursue legal action against the dissemination of inaccurate data that could mislead the public. Egypt aims to reduce both public and external debt to achieve an overall debt-to-GDP ratio of 40 percent or below by the end of FY 2025/26, as previously stated by Prime Minister Mostafa Madbouly. As of December 2025, the external debt-to-GDP ratio stood at approximately 44 percent, with plans to cut external debt by $1-2 billion annually through measures like tighter fiscal discipline and debt-for-investment and debt-for-development swap arrangements.
Finance Minister Ahmed Kouchouk noted that the budget-sector debt-to-GDP ratio has declined by more than 11 percentage points over the past two years, with a target of reducing it to below 80 percent by June 2026. Kouchouk stressed the importance of lowering debt servicing costs to create fiscal space for priority spending and stated that any exceptional revenues would be used solely for debt reduction.
International lenders have also offered positive assessments. The International Monetary Fund (IMF) acknowledged Egypt's stabilization efforts, citing gains such as stronger growth, an improved balance of payments, a narrowing current account deficit, resilient remittances and tourism revenues, and solid non-oil export growth. The World Bank has projected average GDP growth of 4.5 percent between 2025 and 2027.
During the first half of FY 2025/26, government revenues increased by over 30 percent, surpassing expenditure growth, with tax revenues rising by more than 32 percent year-on-year. This period saw a primary surplus of nearly EGP 383 billion, around 1.8 percent of GDP, compared to 1.3 percent a year earlier, contributing to a budget deficit of approximately 4.1 percent of GDP. The second half of the fiscal year is expected to deliver stronger fiscal performance as tax filing season begins, and profit surpluses from state-owned companies and public authorities are transferred to the finance ministry between March and June.