Egypt’s Debt Interest Bill Rises to EGP 2.02 Trillion in Ten Months Despite Narrower Fiscal Deficit
Egypt’s debt interest bill continued to climb during the first ten months of fiscal year 2025/2026, reflecting the heavy cost of servicing public debt despite a visible improvement in the overall fiscal deficit.
According to Ministry of Finance data for the period from July 2025 to April 2026, interest payments rose by around 22% year on year to approximately EGP 2.020 trillion, compared with EGP 1.657 trillion during the same period of the previous fiscal year. This means Egypt’s interest bill increased by roughly EGP 363 billion in ten months.
The scale of the increase highlights the pressure that high interest rates and refinancing needs continue to place on the public budget. On average, the government paid about EGP 202 billion per month in interest during the period. On a daily basis, this equals roughly EGP 6.6 billion, assuming the total interest bill is spread across the July to April period.
Interest payments absorbed around 54% of total government expenditures, which reached approximately EGP 3.733 trillion during the first ten months of the fiscal year. This means that more than half of government spending went to servicing debt, while non-interest spending accounted for the remaining 46%, or about EGP 1.713 trillion.
The interest burden also represented about 75.9% of total revenues, which stood at approximately EGP 2.663 trillion. In practical terms, nearly three quarters of every pound collected by the state during the period was absorbed by debt servicing.
Revenues Improve Faster Than Spending
Despite the sharp increase in interest payments, Egypt’s fiscal performance showed improvement on the revenue side. Total revenues rose to about EGP 2.663 trillion during the first ten months of fiscal year 2025/2026, an increase of approximately EGP 686.7 billion compared with the same period last year. This implies revenue growth of about 35%.
Total expenditures increased at a slower pace, rising by around 21% to EGP 3.733 trillion, compared with approximately EGP 3.080 trillion during the same period of the previous fiscal year. In absolute terms, spending increased by roughly EGP 653 billion.
This means revenue growth exceeded expenditure growth, helping reduce the overall deficit even as interest payments increased. The improvement reflects stronger revenue performance and continued efforts to manage expenditure growth, but the fiscal benefit is being constrained by the weight of debt service.
Overall Deficit Narrows as Share of GDP
The overall deficit declined to around 5.3% of gross domestic product during the first ten months of fiscal year 2025/2026, compared with 6.2% during the same period of the previous fiscal year. In value terms, the deficit fell to around EGP 1.124 trillion, compared with approximately EGP 1.22 trillion a year earlier.
This represents an improvement of around EGP 96 billion, or about 7.9%, despite the higher interest bill. Based on the reported deficit value and deficit ratio, the implied nominal GDP base for the period is around EGP 21.2 trillion.
The decline in the deficit shows that fiscal consolidation is progressing. However, the improvement is occurring alongside a very large debt servicing burden, which remains the dominant constraint on budget flexibility.
Primary Balance Shows the Core Fiscal Divide
The clearest sign of improvement appears in the primary balance, which excludes interest payments. Using the reported overall deficit of around EGP 1.124 trillion and interest payments of EGP 2.020 trillion, Egypt recorded an implied primary surplus of approximately EGP 896 billion during the first ten months of the fiscal year.
This is the central fiscal divide. Before interest payments, the budget position was strongly positive. However, the EGP 2.020 trillion interest bill more than erased that surplus and pushed the overall balance back into deficit.
This distinction matters because it shows that Egypt’s primary fiscal position is improving, while the cost of servicing accumulated debt remains the main source of pressure. The government is collecting more revenue than it spends on non-interest items, but debt service continues to absorb the gains.
Interest Payments Exceed Non-Interest Spending
The structure of spending also shows the depth of the pressure. Interest payments of EGP 2.020 trillion exceeded non-interest spending of around EGP 1.713 trillion by approximately EGP 307 billion.
This means the government spent more on debt service than on all other budget items combined, excluding interest. These other items include wages, subsidies, public investment, purchases of goods and services, and social spending.
The fiscal implication is significant. Every additional pound directed to interest payments reduces the space available for public investment, infrastructure, health, education and targeted social protection. This is why the debt service burden is not only a financing issue, but also a constraint on development spending.
Monetary Policy Lag Keeps Pressure Elevated
The rise in interest payments reflects the impact of high domestic interest rates, large refinancing requirements and the structure of Egypt’s debt stock. Even if inflation continues to moderate and interest rates begin to decline, the fiscal benefit may take time to appear.
This is because the government must continue rolling over maturing debt, especially short-term instruments, at prevailing market yields. As a result, the interest bill can remain elevated for several quarters even after monetary conditions start to ease.
Lower interest rates would help reduce the cost of new borrowing over time, but the transition is not immediate. The speed of relief will depend on the maturity profile of public debt, the pace of refinancing, investor demand and the extent to which lower rates are reflected in government securities auctions.
Outlook
The latest figures show a mixed fiscal picture. On one hand, Egypt’s revenues are growing strongly, the overall deficit has narrowed as a share of GDP and the primary balance remains positive. These are important signs of fiscal resilience.
On the other hand, the interest bill reached EGP 2.020 trillion in only ten months, absorbing more than half of total spending and about three quarters of revenues. This remains the key challenge for Egypt’s fiscal outlook.
The path forward depends on sustaining revenue growth, controlling non-interest spending, extending debt maturities and gradually reducing borrowing costs. Strong primary surpluses can support fiscal consolidation, but a durable improvement will require the debt service burden to ease over time.
The main takeaway is that Egypt’s fiscal position is improving before interest payments, but the cost of debt remains the dominant pressure point. The country is making progress on revenues and deficit reduction, yet high interest payments continue to limit fiscal space and delay the full benefits of consolidation.
Source note: Analysis based on Egypt Ministry of Finance monthly financial reporting for fiscal year 2025/2026, including July to April results, and verified calculations from reported figures on revenues, expenditures, interest payments, deficit indicators and fiscal balance trends.
