Egypt aims to reduce its public debt to the lowest level seen in half a century, Prime Minister Mostafa Madbouly said this week, underscoring the government’s focus on fiscal consolidation, structural reform and private sector-led growth as it works through its programme with the International Monetary Fund.
Speaking after the cabinet’s weekly meeting, Madbouly said the government’s priority remains maintaining economic sustainability while safeguarding citizens from additional pressures until the conclusion of Egypt’s IMF-supported reform programme.
Egypt has been grappling with high debt levels, elevated inflation and foreign currency shortages in recent years, challenges exacerbated by global shocks, including the Covid-19 pandemic, Russia’s war in Ukraine and tightening global financial conditions. In response, authorities embarked on a broad reform agenda aimed at stabilising the economy and restoring investor confidence.
Madbouly said Egypt’s debt-to-GDP ratio has declined to around 84 percent, down from 96 percent two years ago, reflecting efforts to rein in borrowing, reduce debt servicing costs and lengthen maturities. He added that a second edition of Egypt’s debt management strategy is expected to be released this month, outlining further steps to curb financing needs and improve debt sustainability.
Earlier this week, the IMF reached a staff-level agreement with Egypt on the fifth and sixth reviews of its $8 billion Extended Fund Facility, alongside the first review under a $1.3 billion Resilience and Sustainability Facility. Once approved by the IMF’s Executive Board – expected later this year or in early January – the agreements would unlock about $2.5 billion in financing.
The IMF has repeatedly stressed the importance of maintaining a tight and credible policy stance, while allowing for cautious and gradual easing to support disinflation. It has also urged Egypt to accelerate reforms aimed at boosting competition, improving governance and expanding the role of the private sector in driving growth.
Madbouly said private investment now accounts for around 66 percent of total investment in the economy, a figure the government hopes to increase further through regulatory reforms, fiscal incentives and expanded access to finance. He said Egypt is seeking to shift away from state-led investment towards a more private sector-driven growth model.
Prime Media Adviser Hany Younes said the government will announce new debt-reduction measures in the coming days, describing them as decisive. He said international institutions, including the IMF, have issued positive assessments of Egypt’s recent economic performance, pointing to improving growth indicators and easing inflationary pressures.
As part of its broader economic strategy, the government is pushing to expand domestic manufacturing, particularly in sectors linked to renewable energy and industrial exports. Madbouly said several projects, including factories producing solar panels, are expected to be inaugurated by January 2026. Authorities aim to raise the share of manufacturing to 20 percent of gross domestic product and achieve real GDP growth of around seven percent in the medium term.
Egypt is also promoting large-scale development projects, including in the Golden Triangle region of Upper Egypt, which the government hopes to transform into a major industrial and mining hub. Plans include upgrading Safaga port into a key logistics centre to support exports of minerals, fertilisers and construction materials.
On the fiscal side, Finance Minister Ahmed Kouchouk said tax revenues rose by about 35 percent in the first quarter of the 2025/26 fiscal year, driven by efforts to broaden the tax base rather than raise rates. He said the government is working to reduce its financing needs, expand targeted social spending and increase allocations for health, education and cash support programmes.
The finance ministry is finalising a second package of tax facilitations aimed at encouraging compliance through streamlined procedures and expanded digital services, while keeping the real estate transaction tax at 2.5 percent.
Despite signs of stabilisation, analysts say Egypt still faces significant challenges, including high debt servicing costs, external financing needs and vulnerability to global market volatility. The success of the government’s strategy, they say, will depend on sustained reform momentum, continued IMF support and the ability to attract long-term private investment.
