Goldman Sachs offers its predictions for Egypt’s economy: Goldman Sachs wrapped its investor trip to Egypt at the end of last week to meet with policymakers, analysts, and local market participants with six “key takeaways” on the path they think the Egyptian economy is going in a note seen by EnterpriseAM.

#1- An improved policy mix: The new Madbouly government has injected “a new sense of urgency” to Egypt’s policymaking, with a renewed focus on addressing the economy’s low export base by encouraging private sector investment, Goldman Sachs’ Farouk Soussa wrote. The finance and investment ministries have been part of a coordinated effort to reduce fees, tariffs, and other burdens placed on investors, all while streamlining the process of collecting fees from corporates, with some currently facing “demands for payment from up to 67 different economic authorities” and having their effective tax rate doubled to 45% in some cases, Soussa said.

Egypt has also seen improvements in its trade policy, with an increased focus on reducing the amount of time that goods are held at ports to just two days — down from 14 days previously — with the government looking to capitalize on Europe’s move towards near-shoring and the larger re-routing of supply chains, according to Soussa.

#2- Local sentiment remains “patchy”: Conversations with local players in Egypt’s economy indicated continued concern regarding the country’s macro outlook. Many of the people the bank spoke to see the EGP weakening further against the greenback throughout 2025, penciling in predictions of the exchange rate reaching EGP 59/USD by the end of the year.

This, in turn, has created a high level of uncertainty over the inflation outlook for local players, with fiscal adjustments potentially leading to more inflationary pressures throughout the year. Local bankers and economists also see interest rates dropping by around 600 basis points to 20-21% by the end of the year — a far more hawkish prediction than Goldman’s own forecast of 13% by year-end. All these factors, coupled with the ongoing erosion of real wages and uncertainty over the geopolitical environment have created larger concerns over Egypt’s growth outlook in the short-term.

#3- The state’s progress on deeper structural reforms remains disappointing: The government’s progress on implementing structural reforms has left a lot to be desired for local players — particularly in reforms that pertain to the state’s involvement in the economy and the creation of a level playing field with private sector players, Soussa wrote.

Meanwhile, progress on the government’s privatization program “remains relatively weak,” Soussa added. The government has argued that many of its assets have suffered from “years of mismanagement and poor accounting/record-keeping” — which could slow down the process of preparing some of these assets for sale — and that authorities are looking to “optimise divestment opportunities in accordance with prevailing market conditions and priorities,” he said.

#4- Developments in our program with the IMF remain positive: Egypt’s ongoing program with the International Monetary Fund has remained on track, with Soussa writing that both parties are demonstrating a “genuine commitment” to maintaining the success of the program. While a staff level agreement over our fourth review with the Fund has seen some setbacks, authorities told Goldman that the delay is down to “the desire of the Egyptian authorities to re-calibrate certain targets” that would better reflect the “evolution of the macro environment (particularly the external environment),” and to ensure that the goals of the program remain achievable.

Some risks remain, however: The IMF’s push for significant fiscal consolidation through the removal of exemptions and the widening of the VAT base could safeguard Egypt’s debt sustainability — but they could potentially cause wider inflationary pressures and slow growth further, especially if the state continues to delay the implementation of structural reforms that could counteract some of the effects of these policies, Soussa writes.

#5- The investment outlook for the energy sector is mixed: While efforts at clearing arrears owed to international oil players and introducing fresh incentives to energy players represent positive developments, “liquidity in the sector remains tight and the clearance of arrears slow and uneven, with smaller operators receiving less than larger ones,” industry players told Goldman. In addition, some in the industry remain doubtful that production can return to previous highs without any significant discoveries, leading to a general view that the energy deficit will remain significant in the medium term.

#6- More debt issuances expected in the first half of the year: The Finance Ministry is looking to raise some USD 3-4 bn in external debt issuances before the end of June, including eurobonds, green bonds, panda bonds and sukuk.

Goldman’s overall outlook for Egypt remains unchanged following the visit: The bank still sees deep rate cuts taking place across the year, maintaining its forecast of interest rates dropping to 13% by the end of the year. It also sees the exchange rate as “well-supported” in the short-term, as a result of the reversal of “factors driving portfolio outflows in Q4 last year” and subsequent surge of inflows with the start of the year, coupled with a pick-up in external issuance by the government, and further disbursements of funds from the IMF.

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