Egypt adds EGP 85B to budget to address rising debt costs

Egypt’s parliament budget committee approved an additional 85 billion Egyptian pounds ($1.8 billion) in spending for the current fiscal year, driven by soaring public debt servicing costs, the committee said Wednesday. The revised figures will go before the full House of Representatives next week.

The added funds are earmarked for interest payments, which have ballooned to nearly half the state’s total spending—49.9% this year compared to 31.9% in FY 2021/22. The bill also includes a matching 85 billion pounds increase in tax revenue targets to offset the additional outlay.

The Finance Ministry said the move reflects global interest rate hikes and exchange rate volatility, while highlighting improved tax collection efforts. “We’ve achieved the highest growth in tax revenues since 2005,” the finance minister said in May.

According to a memorandum from the Finance Ministry submitted to parliament, the fiscal strain stems from higher yields on treasury bills and bonds and a shift in debt strategy to longer-term instruments. It cited the March 6, 2024 decision by Egypt’s central bank to hike key rates by 600 basis points as a major driver of increased debt costs.

Despite a subsequent rate cut, the government says the treasury faced interest payments of 3.49% above budget forecasts over the past 10 months. Structural reforms in tax policy helped lift collections by 38% between July 2024 and May 2025, the memo noted.