Egypt’s Ministry of Finance said recent economic and fiscal reforms have strengthened public finances, improved foreign-exchange reserves and supported faster economic activity, following Moody’s decision to upgrade Egypt’s sovereign credit rating to B3 from Caa1 while maintaining a positive outlook.

The ministry said the upgrade reflects progress in fiscal consolidation and structural reforms, while stressing that Egypt remains focused on addressing debt-servicing costs, improving the business environment and supporting private-sector investment and productivity.

Government Debt Falls to 81.9% of GDP

The ministry highlighted the decline in government debt, saying strong economic growth helped bring the debt-to-GDP ratio down to 81.9% in June 2026.

It also pointed to an improvement in Egypt’s external position, with net international reserves reaching $57 billion in September 2026.

Moody’s cited sustained fiscal consolidation and structural reforms among the factors behind its decision to raise Egypt’s rating by one notch. The agency also pointed to stronger primary budget performance and a downward trajectory in public debt metrics.

Tax Revenues Rise Without Additional Burden

According to the Ministry of Finance, tax revenues increased to 13% of GDP, an improvement of 1.6 percentage points over two years, without imposing additional burdens on taxpayers.

The ministry said the increase reflects efforts to strengthen revenue collection and improve the efficiency of the tax system, while maintaining its broader objective of supporting economic activity and investment.

The government has also emphasized the need to create a more attractive environment for private investment by simplifying procedures, strengthening competition and reducing barriers facing businesses.

A Positive Outlook, With Reform Still Central

The ministry said Moody’s decision to maintain a positive outlook reflects expectations of stronger economic growth as Egypt continues implementing reforms, maintains fiscal discipline and supports production and exports.

Moody’s said the outlook reflects the possibility that continued fiscal discipline and reforms could bring down government debt and borrowing costs faster than its baseline projections.

The outlook signals scope for further improvement in Egypt’s credit profile if reform momentum, fiscal consolidation and economic performance continue. It does not guarantee another upgrade.

Debt-Service Costs Remain a Key Challenge

The upgrade does not eliminate the challenges facing Egypt’s public finances. The Ministry of Finance acknowledged that high debt-servicing costs remain a major challenge, saying it is working to reduce them at a faster pace in the coming period.

While the decline in the debt-to-GDP ratio represents progress, the government continues to face pressure from the cost of servicing its debt. The ministry said it is working to improve the structure of public finances and reduce these pressures, creating more room for spending on priority areas.

The government aims to use that additional fiscal space to increase spending on healthcare, education and more targeted social protection, while maintaining fiscal stability.

The emphasis on targeted support reflects the government’s stated aim of improving the efficiency of public spending while protecting vulnerable groups during the reform process. Balancing debt reduction with investment in human capital and essential public services remains central to its economic policy.

From Stabilisation to Productivity Growth

The Finance Ministry said the next phase of economic policy will focus increasingly on productivity growth, structural reforms and a larger role for the private sector.

It said the government will continue developing the business environment by simplifying procedures, enhancing competition and supporting private investment. The objective is to increase investment, improve productivity and achieve higher and more sustainable growth rates.

The government also intends to accelerate structural reforms to strengthen investor confidence and expand the economy’s productive capacity. By encouraging investment, increasing production and expanding Egyptian exports, it aims to strengthen the connection between reforms and real-sector activity.

The ministry emphasized the importance of measures that support productivity, production and exports over the longer term, alongside fiscal reforms. This approach is intended to support more sustainable sources of growth, with greater emphasis on productive investment and less reliance on short-term financial measures.

It said its policies remain balanced, combining continued fiscal discipline with measures designed to support economic growth and development.

An Economy More Resilient to External Shocks

In its statement following the rating action, the Ministry of Finance said the Egyptian economy has become more capable of absorbing external shocks despite a series of major disruptions in recent years.

These included the COVID-19 pandemic, the Russia-Ukraine war and the continuing regional turmoil surrounding the war in Gaza, which have affected commodity prices, trade flows, tourism, energy markets and foreign-exchange conditions.

Against this backdrop, the government said the improvement in reserves, the decline in the debt ratio and stronger economic activity demonstrate increased capacity to withstand external pressures.

Moody’s similarly pointed to the strengthening of Egypt’s policy framework and its ability to absorb foreign-exchange shocks as factors supporting the upgrade.