Egypt is targeting a reduction in its debt-to-GDP ratio to about 78 percent by June 2027 as part of a new fiscal strategy aimed at strengthening economic stability, while the economy recorded 5 percent growth in the third quarter despite the impact of regional conflict.
Prime Minister Mostafa Madbouly said the newly approved state budget would focus on reducing government financing needs, lowering debt servicing pressures and increasing investment in productive sectors.
The government also aims to cut external debt by between US$1 billion and US$2 billion as it works to improve public finances.
Madbouly said the budget seeks to reduce the financing needs of state budget agencies to 10% of GDP and bring debt service costs down to 35 percent of total expenditure over the medium term.
The budget includes major allocations for social programmes, including 837 billion Egyptian pounds for social protection and 822 billion pounds for public sector salaries.
Funding for healthcare and education has increased by 30 percent and 20 percent respectively, while 80 billion pounds has been allocated to support industry, local manufacturing, entrepreneurship and exports.
Despite economic pressures linked to the regional fallout from the US-Iran conflict, Egypt’s economy expanded by 5 percent in the third quarter, compared with 4.8 percent growth during the same period a year earlier.
Madbouly said the petroleum sector returned to growth after the government settled outstanding payments to foreign partners and encouraged renewed exploration and production activity.
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To improve the investment environment, parliament approved six draft laws aimed at simplifying tax regulations and easing procedures for businesses.
Private sector push and investment plans
Egypt is also seeking to increase private sector participation in the economy.
Madbouly introduced the second version of the State Ownership Policy Document, which aims to raise the private sector’s share of total state investments to 65 percent by 2030.
Private sector participation has already increased to 56.5 percent, from below 40 percent in recent years, according to the government.
The prime minister highlighted a US$3.1 billion integrated urban development project in East Cairo involving Egyptian and Emirati private sector companies.
In renewable energy, Norwegian firm Scatec plans to invest more than US$5 billion in Egypt.
The company’s projects include the first phase of the Obelisk renewable energy project, which will generate 1,100 megawatts of solar power alongside 200 megawatts of battery storage capacity.
A 5-gigawatt battery storage manufacturing facility is also planned and is expected to begin production in June 2027, supporting Egypt’s renewable energy ambitions and improving electricity reliability.
Tourism and regional challenges
Madbouly said Egypt, alongside Saudi Arabia, Pakistan and Turkey, played a role in diplomatic efforts involving the United States and Iran aimed at ending their conflict.
He said Egypt continued to oppose military escalation and supported efforts to protect regional stability.
The regional conflict has affected Egypt’s tourism outlook since May. The country recorded a 16% year-on-year increase in tourist arrivals in the first quarter after welcoming a record 19 million visitors last year.
However, officials expect the conflict to weigh on arrivals during the second and third quarters and are preparing incentives to support tourism investors.
Domestically, Madbouly said the Fustat Hills Park project in historic Cairo was nearing completion, with remaining commercial and hotel facilities expected to be finished by September 30.
The government said it remains focused on reducing debt pressures, attracting private investment and maintaining growth despite a challenging regional environment.
