Fitch Ratings has affirmed Egypt’s long-term credit rating at ‘B’ with a Stable Outlook, indicating optimism for the country’s economic future. The agency projects that Egypt will experience steady economic growth along with a reduction in inflation and a gradual decline in government debt over the next few years.
Economic Growth Projections
Fitch anticipates that Egypt’s economy will expand by 4.7 percent in the fiscal year 2026/27, following a growth rate of 5.1 percent in 2025/26. However, growth is expected to moderate as high levels of inflation continue to exert pressure on consumer spending and overall investment activity. The forecast for inflation stands at an average of 12.3 percent for FY2026/27, compared to 11.6 percent in the previous fiscal year. It is anticipated that inflation will dip below 10 percent in 2027/28, aided by factors such as a flexible exchange rate, tight monetary policies, and decreasing commodity prices.
Strengthened External Position
Egypt’s external financial standing is showing signs of improvement. Gross international reserves rose by $5.5 billion during the initial eight months of 2026, reaching a total of $54.4 billion. Likewise, the Central Bank of Egypt’s net foreign assets grew by $5.6 billion, amounting to $19 billion by August. The current-account deficit is expected to decrease to below 3.5 percent of GDP by FY2027/28, down from an estimated 5.1 percent in FY2025/26. Although higher energy import costs widened the deficit this year, a 10 percent rise in tourism revenue and an 18 percent increase in remittances have provided some mitigation.
Public Financial Health
On the fiscal side, Fitch projects that general government debt will decline by roughly 8 percentage points, falling to 72 percent of GDP by the end of FY2027/28. Interest payments on this debt are expected to decrease, constituting 52 percent of government revenue compared to 63 percent in FY2025/26. While the budget deficit is projected to rise modestly to 5.8 percent of GDP in FY2026/27 from 5.3 percent in the previous year, it is anticipated to narrow again to below 5 percent in FY2027/28.
Continued Support and Challenges
Fitch underscores that Egypt’s credit rating benefits from its robust external buffers, potential for growth, and backing from bilateral and multilateral partners. However, challenges persist, including a high level of public debt, rising debt-servicing costs, significant external financing requirements, elevated inflation, and geopolitical uncertainties. The agency expects that ongoing programs with the International Monetary Fund (IMF), including the Extended Fund Facility and the Resilience and Sustainability Facility, will conclude in November 2026. No immediate disbursing program is anticipated to follow.
Fitch believes that Egypt’s current policy framework, characterized by real positive interest rates, fiscal discipline, and a flexible exchange rate, will likely be maintained over the medium term. This stability is critical for ensuring sustained economic growth and improving public financial health in the years to come.