Prime Minister Mostafa Madbouly recently announced significant updates regarding Egypt’s fiscal policies, particularly focusing on public debt management. His comments reveal the government’s ambition to strategically reduce the budget-sector public debt as a proportion of the nation’s GDP, aiming for economic stability and growth.
Current Debt Levels and Targets
As of the conclusion of the fiscal year 2025/26, Egypt’s budget-sector debt reached approximately 81.8% of its GDP. However, the government is implementing a plan to decrease this figure to around 78% within the current fiscal year. According to Madbouly, the initiative is part of a gradual reduction strategy, with a long-term target of achieving a debt level of 75%. The robust economic growth figure of 5.1% for 2025/26 underlines the government’s optimistic outlook.
Fiscal Performance and Revenue Generation
During the past fiscal year, Egypt reported a primary surplus of 4.9% of GDP. Prime Minister Madbouly highlighted the impressive 32% increase in overall government revenues, which was substantially supported by a 27% surge in tax revenues—achieved without increasing tax rates. These gains stem from a broader tax base and improved collection mechanisms, alongside disciplined spending practices. Such fiscal discipline is expected to contribute positively to the nation’s financial health.
External Debt and Financial Allocations
On the external debt front, Egypt experienced a reduction from USD 79.1 billion two years ago to USD 76.1 billion by June 30, 2026. To sustain this downward trend, the government intends to further reduce external debt by an annual target of USD 1.5 billion to USD 2 billion. The Prime Minister stated that lowering debt-servicing costs would facilitate greater funding for essential public services. For FY2026/27, allocations for health rose by approximately 30%, while education funding increased by about 20%.
Economic Indicators and Inflation Trends
Madbouly also pointed to notable improvements in foreign-currency indicators, boasting net international reserves of around USD 57.2 billion. The government highlighted the positive impact of enhanced remittances, a resurgence in tourism, and recovering revenues from the Suez Canal. Interestingly, nationwide inflation decreased to 12.7% in August from a concerning 23.2% in January 2025. Furthermore, unemployment rates stood at 5.8% in the second quarter of 2026, indicating a gradual recovery in the job market.
Overall, the Egyptian government’s fiscal strategies focus on achieving a balanced debt reduction while nurturing sectors like health and education, which are crucial for long-term national development. The combination of strategic planning, improved fiscal performance, and favorable economic indicators suggests a positive trajectory for Egypt’s economy moving forward.