Egypt’s newly approved state budget aims to reduce the debt-to-GDP ratio to approximately 78% by June 2027 and cut external debt by $1bn to $2bn, Prime Minister Mostafa Madbouly announced on Wednesday, as the economy recorded a 5% growth rate in the third quarter despite the regional fallout from the US-Iran war.
Speaking at a weekly press conference in the New Administrative Capital following a cabinet meeting, Madbouly detailed the government’s economic targets, investment strategies, and diplomatic initiatives.
Economic Growth and Budget Allocations
The new state budget focuses on structural economic adjustments, aiming to lower the financing needs of budget agencies to 10% of GDP and reduce the debt service bill to 35% of overall expenditures in the medium term. It also includes substantial allocations for public services such as EGP 837bn allocated for social safety net programmes. It also included EGP 822bn designated for public sector salaries.
Moreover, the health and education funding increased by 30% and 20%, respectively, while EGP 80bn were allocated to stimulate industry, local manufacturing, entrepreneurship, and exports.
Despite the economic pressures generated by the US-Iran conflict in the second half of the fiscal year, Egypt’s economy expanded by 5% in the third quarter, up from 4.8% during the same period last year. Madbouly noted that the petroleum sector returned to positive growth following the settlement of arrears to foreign partners and the resumption of exploration and production activities.
To further stimulate the business climate, parliament approved six draft laws amending tax regulations to simplify procedures for investors.
Private Sector and Investments
The prime minister introduced the second iteration of the State Ownership Policy Document, welcoming expert feedback. The policy targets increasing the private sector’s share of total state investments to 65% before 2030. Private investment currently stands at 56.5%, an increase from less than 40% in recent years.
Reflecting this push, Madbouly highlighted a new $3.1bn integrated urban project in East Cairo, formed through a strategic partnership between Egyptian and Emirati private real estate companies.
In the renewable energy sector, Norwegian company Scatec plans to invest more than $5bn in Egypt. Recent developments discussed with the company include the inauguration of the first phase of the “Obelisk” project, generating 1,100 megawatts (MW) of solar energy alongside 200 MW of battery storage.
It also include a planned 5-gigawatt battery storage manufacturing plant, scheduled to begin production in June 2027 to help localise the industry and ensure continuous power supply post-sunset.
Regional Diplomacy and Tourism
Addressing regional security, Madbouly stated that Egypt, alongside Saudi Arabia, Pakistan, and Turkey, contributed to mediating a memorandum of understanding between the United States and Iran aimed at ending their conflict.
President Abdel Fattah al-Sisi met with the foreign ministers of the quartet to coordinate subsequent steps. Sisi reiterated Egypt’s rejection of military conflict, emphasised the need to secure Gulf and Lebanese borders, and reaffirmed Egypt’s support for a Palestinian state based on 1967 borders with East Jerusalem as its capital.
The ongoing regional conflict has impacted Egypt’s tourism sector since May. While the first quarter saw a 16% year-on-year growth following a record 19m visitors last year, the government expects the war to suppress tourist arrivals in the second and third quarters. In response, the cabinet agreed to expedite a package of incentives for tourism investors.
Domestic Developments
Domestically, Madbouly announced that the Fustat Hills Park project in historic Cairo is nearing completion. Remaining commercial and hotel facilities are scheduled to be finished by September 30, with a partial opening of the park planned for the coming months.
Madbouly concluded the briefing by marking the upcoming 13th anniversary of the June 30 revolution and congratulating the Egyptian national football team on securing their first victory in the World Cup tournament.
Daily News Egypt
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