Egypt’s new finance minister sets out plan to reduce debt

Reuters/Amr Abdallah Dalsh

• Ahmed Kouchouk took up role in July
• Tax rises ‘unrealistic’, says deputy
• Debt is 46% of government spend

Egypt aims to cut its tax-to-GDP ratio to below 85 percent by the end of June 2026 and issue new debt in pounds to reduce the proportion of external debt, its new finance minister said on Tuesday. 

But Ahmed Kouchouk and his team pushed back on calls to raise taxes.

In his first press conference since taking up the post in July, Kouchouk stressed the need to reduce Egypt’s debt obligations to 35 percent of total government spending, down from roughly 46 percent this year.

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“We will make more effort to reduce the debt rate,” he said. “We are working to reduce the cost of debt, diversify our investor base, the currency of borrowed money [and] markets, and increase the term limits on our debt to improve confidence in the Egyptian economy.” 

The International Monetary Fund has advised Egypt to boost its tax revenues. 

Sherif El Kilany, deputy finance minister for taxes, said at Tuesday’s press conference the government would introduce no new taxes in the upcoming period, calling the suggestion “unrealistic” given inflationary pressures.

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El Kilany reaffirmed a long-standing objective of the Ministry of Finance: to widen the tax base to incorporate more of the informal sector, which accounts for an estimated 40 percent of Egypt’s economy. El Kilany said the ministry would release a tax policy document before the end of October.

Kouchouk pointed out that “no new taxes were imposed” during the last financial year while overall tax revenues increased by 30 percent. The minister said the additional funds were spent on health, education and social services. 

Non-tax revenues increased by 190 percent in 2023-24, mostly thanks to Treasury inflows from the Ras El Hekma deal with the UAE.

The $35 billion agreement with Abu Dhabi helped Egypt to overcome a foreign liquidity crisis and unlock an $8 billion extended fund facility from the IMF. 

In July, Egypt’s foreign reserves grew to an all-time high of $46.5 billion, largely because of a 25-fold increase in IMF special drawing rights.

Kouchouk outlined further spending increases for health, education and social services, including EGP500 billion ($10.2 billion) for the first two phases of the Haya Karima (Decent Life) initiative, which aims to help rural communities. 

“Budgetary numbers are meaningless if they are not reflected in improving the performance of the economy, competitiveness of business and standards of living,” he said.