Ahmed Kamel – Egypt Daily News
Egypt’s public finances came under renewed strain in the first four months of the 2025–2026 fiscal year, as interest payments on debt surpassed the government’s total revenues, widening the overall budget deficit and underscoring the structural fiscal pressures facing the country.
According to the Ministry of Finance’s monthly report released Sunday, interest payments jumped 54 percent year-on-year to 899.11 billion Egyptian pounds (about 18.95 billion dollars). The soaring interest bill exceeded total government revenues by roughly 104 percent, making debt servicing the single largest burden on the state budget and pushing the deficit to 3.2 percent of GDP, compared with 2.6 percent in the same period of the previous fiscal year.
The mounting costs reflect years of heavy borrowing and rising global interest rates. Egypt’s external debt surpassed 156 billion dollars in the first quarter of the year, according to central bank data, marking a historic peak and intensifying concerns about debt sustainability.
Despite the pressure, the government reported an improvement in the primary balance, a key indicator that excludes interest costs. The primary surplus rose to 1.1 percent of GDP, equivalent to 236.8 billion pounds, up from 0.7 percent in the same period last year. A primary surplus means that government revenues are sufficient to cover operational spending before interest obligations are counted.
The government aims to end the fiscal year with a primary surplus of 4 percent of GDP and an overall deficit of 7.3 percent, though analysts say the pace of interest accumulation makes these targets increasingly challenging.
Tax revenues provided a rare bright spot. Collections rose 35 percent to 756.74 billion pounds, representing about 87.5 percent of total revenues. The Finance Ministry attributed the growth to the recovery of economic activity, easing of the foreign currency shortage and the continued digitalization of tax administration, which has expanded the taxpayer base and improved compliance.
Finance Minister Ahmed Kouchouk warned earlier this year that debt-service costs had become the dominant pressure on the budget, noting that the overall deficit in the previous fiscal year had doubled to 1.26 trillion pounds amid soaring interest obligations. At the same time, real GDP growth accelerated to 4.5 percent, offering some relief but not enough to counter the fiscal weight of debt repayments.
The latest budget data highlight several key spending and revenue trends:
• Government expenditures rose 37 percent to 1.5 trillion pounds.
• Total revenues increased 33 percent to 864 billion pounds.
• Wages and employee compensation grew 8.2 percent to 213.24 billion pounds, accounting for 14 percent of total spending.
• Subsidies for goods and services fell 10 percent to 50.2 billion pounds, representing 3.3 percent of expenditures.
Economists say Egypt’s fiscal trajectory remains highly sensitive to global borrowing costs and the pace of local economic recovery. While revenue reforms are bearing fruit, the expanding debt-service burden continues to dominate the budget, leaving the government little room for maneuver as it enters another year of fiscal consolidation and economic restructuring.
