In its latest report, Fitch emphasized that Egypt’s relatively large economy and strong growth potential continue to be supported by solid partnerships with both multilateral institutions and Gulf countries.
Fitch Ratings has maintained Egypt’s long-term foreign-currency credit rating at B with a stable outlook, reflecting a careful balance between the country’s economic strengths and its ongoing structural challenges.
In its latest report, Fitch emphasized that Egypt’s relatively large economy and strong growth potential continue to be supported by solid partnerships with both multilateral institutions and Gulf countries.
One of the main anchors of this assessment is Egypt’s ongoing engagement with the International Monetary Fund (IMF) through its $8 billion Extended Fund Facility, which underlies much of the agency’s outlook and projections. Fitch highlighted the importance of this agreement in stabilizing economic expectations.
Despite this, Egypt still faces serious structural hurdles. Public finances remain under pressure, with a large portion of government revenues going toward interest payments on debt. The country also continues to depend heavily on external financing, which remains vulnerable to global market conditions and commercial volatility. High inflation and geopolitical uncertainty add further pressure to macroeconomic stability.
Fitch expects the current account deficit to widen slightly to 5.6% of GDP in FY 2024/25, before narrowing to 4% the following year. This improvement will likely be supported by increased energy sector activity and renewed foreign investment, including cheaper gas imports. Foreign direct investment (FDI) is projected to rise to $15 billion in FY 2025/26 — 3.8% of GDP — led by strong interest from Gulf countries in real estate and infrastructure.
While the newly imposed US tariffs pose some external risk, Fitch said Egypt’s limited trade exposure to the US and low dependence on US aid reduce the potential impact.
However, geopolitical tensions in the region remain a key downside risk. Suez Canal revenues are expected to recover only partially, reaching 60% of 2023 levels by FY 2025/26. In contrast, tourism has remained surprisingly resilient, with revenue projected to grow by 9% next year.
Fitch projects the budget deficit to widen to 7.4% of GDP in FY 2024/25, mainly due to rising debt servicing costs and the absence of one-off revenues seen in the previous year. Although tax revenues have improved, the government plans new VAT reforms in 2025/26 to help offset this. However, concerns remain over off-budget spending and public sector liabilities, along with uncertainty around long-term fiscal discipline.
Public debt, while still high, is expected to fall to 80.4% of GDP by FY 2025/26, down from 89.4% this year — a positive trend, though still above the typical range for countries with a similar rating. Inflation has dropped significantly, falling from 24% in January to 13.6% in March, and is projected to stabilize around 14% by the end of FY 2024/25, partly due to anticipated fuel subsidy cuts. Fitch also expects the central bank to start lowering interest rates — currently at 27.25% — by late 2025/26, which should ease the pressure on public debt.
