Egypt is increasingly emerging as one of the region’s strongest economic recovery stories as reforms aimed at stabilizing the economy, improving debt management, and attracting investment begin to produce visible results.
The momentum gained further support after S&P Global Ratings affirmed Egypt’s sovereign rating at “B/B” with a stable outlook, signaling growing confidence in the country’s reform trajectory despite ongoing regional and global economic pressures.
The ratings agency noted that Egypt entered the latest period of geopolitical tensions with “stronger external buffers than in previous crises,” citing higher foreign reserves, IMF support, improved foreign assets in the banking sector, and a more flexible exchange-rate regime.
For Egyptian policymakers, the affirmation reflects broader progress across multiple areas of the economy.
“Since March 2024, Egypt has pursued a comprehensive reform agenda that is producing tangible results across multiple dimensions of the economy,” Abdelhaleem Abulhamd, Senior Economist at Egypt’s Ministry of Finance, told Business Monthly.
Egypt spent recent years navigating major external shocks, including the economic fallout from the Russia-Ukraine war, rising inflation, supply-chain disruptions, and foreign currency shortages that placed significant pressure on the economy.
However, several macroeconomic indicators have improved over the past year, including reserve levels, exchange-rate flexibility, debt metrics, and investor sentiment.
“Over the past two years, Egypt’s reform agenda has not only continued, it has proven resilient in the face of significant regional and global shocks,” Abulhamd said. “That track record matters enormously to rating agencies.”
Financial markets have also reflected improving investor confidence.
“If you look at the performance of Egypt’s Eurobond yields and credit default swap spreads, both are at or near their lowest levels in years,” Abulhamd said. “These are real-time measures of investor sentiment, and they tell a story that is ahead of the formal rating currently stands.”
According to Ministry of Finance and Bloomberg data, Egypt’s five-year CDS spreads declined from 1,858 basis points in October 2023 to around 299 basis points recently, while the country’s Eurobond yield curve improved by an average of 5.27% since January 2024.
International partnerships have also played a major role in supporting Egypt’s recovery efforts. The IMF expanded Egypt’s support program to $8 billion, while Gulf countries increased long-term investment commitments through projects including Ras El-Hekma and Qatar-backed tourism developments in Alam El-Roum.
Debt reduction has become another central pillar of the government’s strategy.
“Budget sector debt-to-GDP fell from around 96% in FY2022/23 to less than 83% in FY2024/25,” Abulhamd said. “What makes this particularly significant improvement is the context.”
“According to the IMF’s latest World Economic Outlook, public debt across emerging markets rose by around 7% of GDP over the same period,” he added. “Egypt moved decisively in the opposite direction.”
Authorities are targeting a further reduction in debt-to-GDP levels toward 71–73% by FY2028/29 under Egypt’s Medium-Term Debt Strategy.
The Ministry of Finance has also worked to extend debt maturities, expand local-currency financing, reduce reliance on external borrowing, and diversify the investor base. Domestic debt now accounts for roughly 74% of Egypt’s debt portfolio, helping reduce exchange-rate risks.
At the same time, Egypt’s external budget-sector debt declined by nearly $3.9 billion between June 2023 and June 2025, according to Ministry of Finance data, with a further preliminary reduction of around $2 billion during the first half of FY2025/26.
The composition of Egypt’s economic growth is also shifting increasingly toward private-sector activity.
“Real GDP expanded by 4.4% in FY2024/25, with the first half of FY2025/26 averaging an even stronger 5.3%,” Abulhamd said.
More than 70% of total investment in FY2024/25 came from the private sector, according to Abulhamd.
“That trajectory signals not just recovery, but a structural shift in the composition of growth,” he said.
Sectors including tourism, non-oil manufacturing, information technology, and communications have contributed strongly to recent growth.
Tourism has become one of Egypt’s strongest-performing sectors, with the country recording around 19 million visitors in 2025 — the highest level in its history.
Meanwhile, fiscal reforms aimed at improving tax administration and compliance have boosted revenues without introducing major tax increases.
“We introduced two tax facilitation packages designed to reduce compliance burdens and streamline the taxpayer experience without increasing any rates,” Abulhamd said.
Those measures contributed to tax revenue growth of approximately 35% in FY2024/25 and around 29% during the first nine months of FY2025/26.
“These gains translated directly into the highest primary surplus Egypt has recorded,” Abulhamd said.
Egyptian authorities have also increased efforts to improve transparency and investor communication through the publication of debt strategies, borrowing plans, quarterly debt bulletins, and medium-term economic projections.
“We have invested considerably in providing timely data, sharing our medium-term macroeconomic assumptions and projections, and maintaining open, forward-looking dialogue,” Abulhamd said. “In sovereign credit, consistency of communication is itself a signal of institutional strength.”
Despite continuing challenges including elevated interest costs, inflationary pressures, and regional geopolitical risks, international markets are increasingly viewing Egypt as an economy capable of sustaining reforms and improving long-term stability.
