Dr. Nasser Hussein
The MODIS credit rating agency said that financial and fiscal reforms in Egypt supported higher initial surpluses over the coming years, with the Agency taking a positive future view of the Egyptian economy.
This comes at a time when the Government continues to implement an IMF-supported economic reform programme aimed at enhancing financial sustainability and reducing financing needs, with continued pressures associated with high energy prices and tightening global financial conditions.
The Agency expected that the initial surplus in Egypt would average about 4 per cent of GDP over the next few years, with the exception of non-recurrent income from the sale of assets, compared with about 3.5% in fiscal year 2025.
This was due to actions including cancellation of tax exemptions for State-owned companies, improvement of compliance and tax administration, as well as the application of new tax measures estimated at about 1 per cent of GDP as additional income.
The Council of Ministers had approved a package of tax reforms and presented it to Parliament, with the expectation that it would be approved by June 2026 as one of the structural criteria of the Fund ' s programme.
The Agency noted the Government ' s commitment to further reduce undirected support, after full recovery of retail fuel costs by the end of 2025, as part of public financial control efforts.
While Modes confirmed the long-term classification of the Egyptian Government in foreign and local currencies at Caa1, while maintaining a positive future view. Unsecured foreign currency bonds have also been classified at Caa1 and the mid-term bond programme is classified at PCa1.
The Agency stated that the positive view, which had been in force since March 2024, reflected expectations of continued improvement in financial and external indicators, supported by the commitment of the authorities to reforms, supporting improved debt sustainability and reduced funding needs.
The Government had maintained significant initial surpluses since fiscal year 2024, while the Central Bank had focused on reducing inflation and rebalancing externally, which had contributed to restoring macroeconomic stability.
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