In its latest review released on Friday, Fitch said Egypt’s rating remains supported by its large economy, improving growth momentum, and steady external buffers, but continues to be weighed down by weak public finances, high debt interest costs, and elevated external financing needs.
According to the agency, gross international reserves rose by $2.1 billion in the first nine months of 2025 to reach $47 billion, while the banking sector’s net foreign asset position improved by $13.7 billion over the same period, reflecting a stronger external footing following the Ras El-Hekma investment deal and ongoing support from Gulf partners.
Fitch forecasts Egypt’s current account deficit will narrow to 2.8 percent of GDP by FY2026/2027, supported by a 66 percent surge in remittances and robust tourism revenues, offsetting a wider trade gap. It also expects foreign direct investment to average $15.5 billion annually in FY2026/2027, underpinned by new Gulf Cooperation Council (GCC) real estate inflows.
The agency highlighted the continued stability of the foreign exchange market since the March 2024 unification of exchange rates, noting the absence of foreign exchange (FX) backlogs and limited currency misalignment.
On the fiscal front, Fitch projects Egypt’s general government deficit to remain flat at 7.5 percent of GDP in the current FY2025/2026, before narrowing to 6.5 percent in FY2026/2027 as debt interest costs ease and tax revenues strengthen. Public debt is forecast to fall gradually to 77 percent of GDP by FY2026/2027 though still well above peers rated at the same level.
Fitch said inflation has declined sharply to 11.7 percent in September 2025, down from 26.5 percent a year earlier, driven by exchange rate stability, slower food price growth, and tight monetary policy. The agency expects inflation to average 12.3 percent in FY2025/2026 and fall further to 10.4 percent in FY2026/2027, supported by a gradual reduction in interest rates.
Economic growth is projected to rise to 4.7 percent in FY2025/2026 and 4.9 percent in FY2026/2027, buoyed by recovering private investment and consumer demand, near Egypt’s estimated potential growth rate.
However, the report warned that fiscal and governance weaknesses remain key constraints, citing the country’s high debt service ratio, expected to fall from 64 percent of revenues in FY2025/2026 to 40 percent by FY2028/2029, still far above the ‘B’ median of 15%. Fitch also pointed to persistent contingent liability risks linked to Egypt’s large and opaque public sector and slow structural reform momentum.
Fitch said any downgrade could result from deteriorating external balances, renewed fiscal slippage, or heightened regional conflict, while sustained reserve build-up, stronger fiscal consolidation, and deeper reforms could support an upgrade.
Egypt’s Country Ceiling was affirmed at ‘B’, while its senior unsecured debt ratings remain aligned with the sovereign IDR, reflecting average recovery prospects in a default scenario.
The International Monetary Fund (IMF) is anticipated to initiate the discussions on the fifth and sixth reviews of Egypt’s Extended Fund Facility (EFF) loan programme this fall. The Egyptian delegation to the World Bank Group/IMF is set to showcase the positive indices the Egyptian economy achieved over the past FY2024/2025 and in 2025, so far, which are expected to boost discussions and the completion of both reviews by the end of the year.
Commenting on the action, Egypt's Minister of Finance Ahmed Kouchouk stated that the economic and fiscal reforms implemented and the positive results achieved, including the strong responsiveness and resilience of the private sector, have attracted increasing attention and appreciation from investors, global markets, and international institutions.
He noted that global rating agencies have begun raising their assessments of the Egyptian economy and improving their outlooks, a trend now reflected in upgraded creditworthiness ratings.
“We are working to address challenges and continue reforms in a consistent and integrated manner to support growth and enhance economic competitiveness,” Kouchouk said, adding that the continuation of coherent reforms and policies will ensure sustained economic stability and have a positive impact on citizens’ quality of life and Egypt’s ability to compete globally.
Kouchouk emphasised that these positive steps by rating agencies reflect an accurate understanding and fair assessment of Egypt’s reform efforts and economic developments, and represent a vote of confidence from international credit institutions and the global financial community in Egypt’s reform program. The program, he added, aims to achieve comprehensive economic stability, strengthen competitiveness, and attract more domestic and foreign investment.
Yasser Sobhy, Deputy Minister for Fiscal Policies, said there is a growing positive sentiment in both local and international circles toward Egypt’s economic performance. This shift, he noted, is reflected in the decline in Egypt’s international borrowing costs and heightened investor interest in expanding direct investments and holdings of Egyptian securities.
Both Standard & Poor’s and Fitch Ratings stated in their recent reports that their decisions are based on continued structural reforms, a flexible exchange rate, higher foreign direct investment inflows, improved external sector indicators, and strong fiscal discipline. They highlighted Egypt’s achievement of a primary budget surplus of 3.6 percent in the past fiscal year, a decline in public debt, and accelerating GDP growth to 4.4 percent in 2025, up from 2.4 percent in 2024.
The agencies also cited greater economic resilience, an improved investment climate, enhanced private sector participation, with private investments growing by more than 70 percent, and fiscal reforms that expanded the tax base by 35 percent without imposing new burdens, supported by a package of tax facilitation measures.
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