Ahmed Kamel – Egypt Daily News
Debt servicing absorbed roughly 83 percent of Egypt’s total budget revenues during the first six months of fiscal year (FY) 2025/2026, underscoring mounting fiscal pressures despite strong revenue growth, according to the Ministry of Finance’s latest monthly financial report.
The data, covering the period from July 2025 to January 2026, show a sharp rise in interest payments, reflecting the continuing impact of elevated borrowing costs and the government’s heavy reliance on domestic and external debt financing.
Interest Burden Surges
Interest payments climbed by 40.8 percent year-on-year, increasing by EGP 430.2 billion to reach EGP 1.48 trillion. The surge highlights the growing weight of debt servicing on the state budget at a time when Egypt continues to navigate tight global financial conditions and high domestic interest rates.
Overall government expenditures rose by 29.5 percent compared with the same period a year earlier, reaching EGP 2.6 trillion.
Spending pressures were visible across several key budget items. Wages and employee compensation increased by 10.6 percent to EGP 371.1 billion, reflecting ongoing public-sector pay commitments. Government purchases of goods and services also rose to EGP 111.4 billion.
Subsidies, grants and social benefits grew by 11.5 percent to EGP 372.6 billion, maintaining the state’s sizable social spending footprint amid inflationary pressures and cost-of-living concerns.
Within this category, food subsidies declined by EGP 3.66 billion to EGP 73.6 billion, while export subsidies increased by EGP 4.2 billion to EGP 10.6 billion, indicating a partial reallocation of support toward production and external trade.
Social Protection Spending Continues
The government maintained funding for social safety nets. Spending on cash transfer programmes, including Takaful and Karama, rose by EGP 2.8 billion to reach EGP 25.8 billion.
Treasury contributions to pension funds increased total pension spending to EGP 102.6 billion, including EGP 8.5 billion in additional support. Meanwhile, EGP 2.3 billion was allocated for citizens’ medical treatment, bringing total healthcare treatment spending to EGP 9.8 billion.
Revenue Growth Provides Partial Relief
On the revenue side, Egypt recorded strong growth. Total budget revenues rose by 41 percent year-on-year to approximately EGP 1.77 trillion during the July–January period.
Tax revenues were the main driver, increasing by 31.4 percent, or EGP 336.3 billion, to reach EGP 1.4 trillion.
Income tax receipts showed particularly strong momentum, rising by 47 percent to EGP 456.6 billion. The increase was supported by broad-based gains across wage earners, businesses and professional activities.
Taxes on local wages rose by 39 percent to about EGP 123.4 billion. Revenues from commercial and industrial activities increased by 49.5 percent to EGP 59.4 billion, while taxes on non-commercial professions climbed by 48 percent to EGP 9.4 billion.
Corporate tax revenues also maintained a strong upward trajectory, rising by 51.7 percent to EGP 260.8 billion. This included a 68 percent jump in taxes from other companies to EGP 168.4 billion and a 20.5 percent increase in taxes related to the Suez Canal, which reached EGP 62.2 billion.
VAT and Consumption Taxes Expand
Value-added tax (VAT) revenues increased by 23.8 percent, or EGP 116.5 billion, to reach EGP 606 billion, driven primarily by stronger collections on goods and services.
VAT on goods rose by 15 percent to EGP 327.3 billion. Within this segment, VAT on imported goods increased to EGP 215.4 billion, while VAT on locally produced goods reached EGP 112 billion.
VAT revenues from services recorded particularly strong growth, rising by 41.7 percent to EGP 86.2 billion. The increase was fueled by higher receipts from hotels and restaurants, toll manufacturing services, and telecommunications.
Taxes on locally manufactured commodities climbed by 40 percent to EGP 120.4 billion. Development fees rose by 23.2 percent to EGP 12.5 billion, while stamp tax revenues increased by 11.8 percent to EGP 25.5 billion.
Property-related tax revenues rose by 29.9 percent to EGP 247 billion, largely due to higher taxes on treasury bills and bond yields, which reached EGP 227.3 billion. Car taxes also increased to EGP 10.9 billion.
Taxes on international trade grew by 20.3 percent to EGP 78.2 billion, while other tax revenues reached EGP 20 billion, supported in part by movable capital transfers from the Central Bank of Egypt.
Mixed Performance in Non-Tax Revenues
Non-tax revenues, which accounted for 20.8 percent of total revenues, rose by EGP 180.7 billion to reach EGP 369 billion overall.
However, collections from sovereign entities declined sharply by 66 percent to EGP 123 million. In contrast, non-tax revenues from non-sovereign entities increased by 36.6 percent to EGP 478 million.
The overall rise in non-tax income was largely driven by higher grants, which increased from EGP 4.7 billion to EGP 8.5 billion, mainly due to larger transfers from government entities.
Mounting Fiscal Challenge
Despite robust revenue growth, the data underline Egypt’s central fiscal challenge: the rapid expansion of debt servicing costs. With interest payments alone consuming more than four-fifths of revenues in the first half of the fiscal year, the government faces continued pressure to balance fiscal consolidation with social spending commitments and economic support measures.
The trajectory of borrowing costs, inflation and growth will remain critical factors shaping Egypt’s fiscal outlook in the coming quarters.
