CAIRO, Oct 9 – Fitch Ratings has affirmed Egypt’s long-term credit rating at ‘B’ with a Stable Outlook, projecting continued economic growth, easing inflation over the medium term and a gradual reduction in public debt as the government pursues fiscal consolidation.
The ratings agency expects Egypt’s economy to expand by 4.7% in fiscal year 2026/27, following estimated growth of 5.1% in FY2025/26. Growth is projected to moderate as elevated prices continue to weigh on household consumption and investment.
Inflation is forecast to average 12.3% in FY2026/27, up from 11.6% in the previous fiscal year, before falling below 10% in FY2027/28. Fitch expects exchange-rate flexibility, tight monetary policy and lower commodity prices to support the disinflation process.
External Buffers Strengthen
Egypt’s external position has improved, supported by higher foreign reserves and stronger foreign-currency inflows.
Gross international reserves increased by $5.5 billion during the first eight months of 2026 to $54.4 billion. Meanwhile, the Central Bank of Egypt’s net foreign asset position rose by $5.6 billion to $19 billion in August.
Fitch expects the current-account deficit to narrow to below 3.5% of GDP by FY2027/28, compared with an estimated 5.1% in FY2025/26.
Higher energy import costs contributed to the wider deficit during the current fiscal year, although stronger tourism and remittance inflows provided some support. Tourism receipts increased by 10%, while remittances rose by 18%.
The agency also highlighted the role of Egypt’s flexible exchange-rate regime in absorbing external shocks following the Iran war. Foreign holdings of government debt declined by approximately $6 billion, while the Egyptian pound depreciated by more than 14% against the US dollar before recovering most of its losses as portfolio inflows resumed.
Public Debt and Interest Costs
Fitch expects Egypt’s general government debt ratio to decline by around eight percentage points to 72% of GDP by the end of FY2027/28.
The agency also projects a reduction in the government’s interest burden, with interest payments expected to fall to 52% of government revenue, from 63% in FY2025/26.
However, the fiscal adjustment is expected to be gradual. The budget deficit is projected to widen moderately to 5.8% of GDP in FY2026/27, from 5.3% in FY2025/26, before narrowing below 5% in FY2027/28.
The projected decline in debt and interest costs would ease pressure on public finances, although debt servicing is expected to continue absorbing a substantial share of government revenue.
IMF Support and Rating Constraints
Fitch said Egypt’s rating is supported by its external financial buffers, growth potential and backing from bilateral and multilateral partners.
Nevertheless, the country continues to face structural constraints, including high public debt, elevated borrowing costs, substantial external financing requirements, inflation and exposure to geopolitical risks.
The agency expects Egypt’s programmes with the International Monetary Fund, comprising the Extended Fund Facility and the Resilience and Sustainability Facility, to conclude in November 2026. It does not anticipate an immediate new disbursing programme following their completion.
Fitch expects the government to maintain its existing policy approach over the medium term, combining positive real interest rates, fiscal consolidation and exchange-rate flexibility.
The Stable Outlook reflects expectations that Egypt can continue to manage these pressures while gradually strengthening its fiscal and external position. However, sustained improvements in debt dynamics and access to external financing will remain important to the country’s credit outlook.
