Ahmed Kamel – Egypt Daily News
Egypt’s Ministry of Finance has strongly rejected what it described as “misleading and unprofessional” media reports questioning the country’s debt position, arguing that recent coverage has misrepresented Egypt’s fiscal trajectory by focusing narrowly on new borrowing while ignoring repayments, structural reforms, and improving market indicators.
In a statement issued on Wednesday, the ministry said a recent report by an Arab news broadcaster presented an incomplete picture of public finances by highlighting domestic debt issuances for the 2025/26 fiscal year without accounting for amortizations, scheduled repayments, or trends in external debt. Officials said such selective analysis risked distorting public understanding of Egypt’s fiscal performance at a time when key indicators are moving in a more positive direction.
According to the ministry, the report suggested that local debt was rising sharply in FY 2025/26, while overlooking broader measures such as the declining debt-to-GDP ratio and reduced sovereign risk premiums in international markets. It added that Egypt’s improving standing with investors was evident in the sharp fall in five-year credit default swap spreads, which dropped below 270 basis points as of January 6, 2026, their lowest level since 2020. Yields on Egypt’s international bonds have also declined by between 300 and 400 basis points compared with the same period last year, reflecting stronger market confidence.
The ministry warned that it reserves the right to pursue legal action against the publication of inaccurate or misleading data, saying such reporting could harm financial stability and investor sentiment.
Government officials have repeatedly stressed that debt reduction remains a central policy objective. Prime Minister Mostafa Madbouly has said Egypt aims to reduce both public and external debt, targeting an overall debt-to-GDP ratio of 40 percent or less by the end of FY 2025/26. While Egypt’s external debt-to-GDP ratio stood at around 44 percent in December 2025, the government plans to reduce external debt by $1–2 billion annually through a combination of fiscal discipline, asset optimization, and innovative financing tools.
Among those tools are debt-for-investment and debt-for-development swap arrangements, which officials say are helping ease external financing pressures while supporting growth and development priorities. Finance Minister Ahmed Kouchouk has said that the budget-sector debt-to-GDP ratio has already fallen by more than 11 percentage points over the past two years, with a goal of bringing it below 80 percent by June 2026.
Kouchouk has emphasized that lowering debt servicing costs is essential to freeing up fiscal space for social spending, infrastructure, and human development. He added that any exceptional or one-off revenues generated by the state are being directed exclusively toward debt reduction rather than new expenditure commitments.
Recent fiscal data appears to support the government’s argument that public finances are stabilizing. During the first half of FY 2025/26, government revenues rose by more than 30 percent, outpacing the growth in expenditures. Tax revenues increased by over 32 percent year-on-year, driven by improved compliance and economic activity. The period recorded a primary surplus of nearly EGP 383 billion, equivalent to about 1.8 percent of GDP, compared with 1.3 percent in the same period a year earlier. The overall budget deficit narrowed to around 4.1 percent of GDP.
Officials note that Egypt’s fiscal performance typically strengthens in the second half of the fiscal year, when tax filing season begins and profit surpluses from state-owned enterprises and public authorities are transferred to the Ministry of Finance between March and June.
International institutions have also adopted a more constructive tone in recent assessments. The International Monetary Fund has said Egypt’s stabilization efforts have delivered “important gains,” pointing to stronger economic growth, an improving balance of payments position, a narrowing current account deficit, resilient remittance inflows, robust tourism revenues, and solid growth in non-oil exports. The World Bank has forecast average GDP growth of 4.5 percent between 2025 and 2027.
While challenges remain particularly in managing high debt servicing costs amid global financial volatility, the government insists that Egypt’s fiscal trajectory is improving and that headline debt figures should be assessed in the context of repayments, structural reforms, and market-based indicators. As the Ministry of Finance made clear, it sees accurate and balanced reporting as critical to sustaining confidence in an economy still navigating a complex regional and global environment.
