Fitch said the improvement in Egypt’s external position reflects stronger financing of the current-account deficit through foreign direct investment and external borrowing.
Fitch Ratings affirmed Egypt’s Long-Term Issuer Default Ratings (IDR) at ‘B’ with a Stable Outlook, citing stronger external buffers, fairly high potential GDP growth and continued support from bilateral and multilateral partners.
Egypt’s gross international reserves rose $5.5 billion in the first eight months of 2026 to $54.4 billion, while the Central Bank of Egypt’s net foreign asset position increased $5.6 billion to $19 billion in August. Fitch said the improvement in Egypt’s external position reflects stronger financing of the current-account deficit through foreign direct investment and external borrowing.
The agency expects Egypt’s economy to grow 4.7% in FY2026/27, following 5.1% growth in FY2025/26. It attributed the expected moderation to elevated inflation weighing on private consumption and slower investment.
Fitch expects inflation to average 12.3% in FY2026/27, up from 11.6% in FY2025/26, before falling below 10% in FY2027/28. It said exchange-rate flexibility, tight monetary policy and lower commodity prices should support the disinflation process.
The agency also expects Egypt’s current-account deficit to narrow to below 3.5% of GDP by FY2027/28, from an estimated 5.1% in FY2025/26. The wider deficit this year was driven largely by higher energy import costs, partly offset by a 10% increase in tourism receipts and an 18% rise in remittances.
Fitch said Egypt’s flexible exchange-rate regime was tested by the Iran war, with foreign holdings of government debt falling by around $6 billion and the pound depreciating more than 14% against the US dollar. Most of the depreciation was subsequently reversed as portfolio inflows resumed, with Fitch noting that the Central Bank did not significantly intervene or impose exchange controls.
On public finances, Fitch forecasts general government debt will decline by around 8 percentage points to 72% of GDP by end-FY2027/28. While still above the ‘B’ median of 57%, the agency expects debt interest costs to fall to 52% of government revenue in FY2027/28 from 63% in FY2025/26.
The budget deficit is forecast to widen moderately to 5.8% of GDP in FY2026/27 from 5.3% in FY2025/26, before narrowing below 5% in FY2027/28.
Fitch expects Egypt’s current policy mix to remain broadly in place, including positive real interest rates, fiscal consolidation and exchange-rate flexibility. The agency expects these policies, alongside continued reforms, to support further improvements in the country’s external and fiscal position.
Egypt’s rating remains constrained by high public debt, elevated debt-servicing costs, sizeable external financing needs, volatile commercial financing flows, high inflation and geopolitical risks.
The agency expects the IMF’s Extended Fund Facility and Resilience and Sustainability Facility programs to conclude in November 2026, with no new disbursing program expected immediately afterward. It said Egypt’s current policy mix is nevertheless likely to continue over the medium term.
