If 2024 was about averting a meltdown, 2025 was the year our macroeconomic plumbing began to function again. With a record USD 50.2 bn in foreign reserves and an S&P rating upgrade to ‘B’, the Madbouly government shifted its focus to duration and diversification. The headline numbers — 5.2% GDP growth in 3Q 2025 and a cumulative 725 bps cut of interest rates — are the result of a deliberate strategy to replace high-cost hot money with long-term, asset-backed liabilities.

Why this matters: For the business community, the narrative has shifted from “Will we devalue again?” to “It’s time to start growing again.” While the IMF is satisfied — it gave the green light to USD 2.7 bn in fresh funding just last week — the wheels of production are still grindinGoodbye, inflationg against high (albeit falling) real interest rates and a tax environment that is being aggressively overhauled to meet revenue targets.

Goodbye, inflation nation and devaluation doomsayers

The EGP had a much better 2025 than market watchers at the beginning of the year expected it to have. The post-float currency started the year at EGP 50.80 against the greenback following a period of moderate volatility and uncertainty in the market. But as we all got used to a freely traded currency, we learned to embrace healthy volatility and saw the currency appreciate against many of its peers, with it currently changing hands at around the EGP 47.60 mark against the greenback.

A stronger and more stable EGP also helped with efforts to reel in inflation. After kicking off the year with a headline rate of 24.0% in January, the rate of inflation has been slashed in half, coming in at 12.3% in November. Analysts are in broad agreement that the disinflation trajectory is here to stay — it’s not just a base effect, so say goodbye to the era of repricing every Tuesday.

Price predictability is not just good for everyday consumers being able to afford and plan ahead financially. Businesses wanting to invest long-term will also get a shot in the arm as price stability ended the era of parallel-market pricing for inputs and provided a predictable foundation for 2026 budgeting.

Inflation progress? Cue the rate cuts.

Once inflation was clearly on a downward trajectory, the Central Bank of Egypt moved aggressively to lower the hurdle rate for private investment. Total rate cuts for 2025 reached a cumulative 725 basis points following last Thursday’s decision, bringing the overnight deposit rate down to 20.00%.

This shift is the essential catalyst for a long-awaited surge in CAPEX, as the lowering of the nominal policy rate effectively lowers the bar for project viability across the real economy. For the past eight quarters, internal rate of return requirements for new factories and other projects were prohibitively high, but at a 20% corridor, a vast swathe of “stalled” industrial projects has suddenly become bankable.

Growth at last, growth at last, says the non-oil private sector

The S&P Global Purchasing Managers’ Index (PMI) was a barometer for the on-the-ground recovery, finally breaching the neutral 50.0 mark to hit 51.1 in November. Non-oil private sector activity expanded at its quickest pace in five years on the back of an uptick in new orders and output amid easing cost pressures.

Policymakers will be hoping that this signals an end-of-year turnaround for the private sector, with it finally beginning to respond to the improved liquidity and falling interest rate environment.

Bolstering optimism was the economy growing at its highest quarterly rate for three years in 3Q 2025, hitting a 5.3% clip, up a whole 1.8 percentage points from a year prior. Driving the headline figure were expansions in non-oil manufacturing, tech, tourism, and financial services. The higher GDP growth was largely expected as economic activity continues to normalize and regain momentum on the back of better USD availability, predictability, and confidence, Thndr’s Esraa Ahmed told EnterpriseAM at the time.

Progress is balancing the books

Egypt recorded an exceptional primary surplus of 3.5% of GDP for the fiscal year that ended in June, a clear signal of fiscal consolidation that satisfied the IMF’s rigorous review criteria. This surplus was achieved through a 35% increase in tax revenues — reaching EGP 2.2 tn in the elapsed fiscal year — and a rigid cap on non-essential public investment. The challenge moving into 2026 will be maintaining this discipline as the IMF targets an even more ambitious 5% primary surplus in the next fiscal year to accelerate debt reduction.

The search for better debt

Egypt moved beyond traditional borrowing in 2025 by collateralizing sovereign assets to lock-in lower financing costs. The allocation of 174 mn sqm of land at Ras Shuqair to the Finance Ministry served as the foundation for the country’s first local ijarah sukuk program. By backing debt with physical land assets like this, the government was able to secure yields approximately 8% lower than traditional, unsecured Treasury instruments. That could help create a new blueprint for managing the debt-to-GDP ratio, which ended the year at around 85%.

The Finance Ministry spent the year aggressively extending the maturity of its debt profile to avoid the short-term traps of previous years. By returning to the Eurobond market for the first time in four years with a USD 2 billion issuance, the state replaced maturing short-term T-bills with much longer-term instruments. This extension of duration is a critical shock absorber, ensuring that global market volatility does not trigger an immediate liquidity crisis at home.

Later in the year, the Finance Ministry launched its second-ever sovereign sukukissuance as a USD 1 bn private placement, which was then followed by another issuance. The country also embarked on the first of many local sukuk issuances, which will support a wider EGP 200 bn sukuk program for the fiscal year. The Finance Ministry has also laid the groundwork for a USD 500 mn return to the Samurai bond market, part of a broader USD 4 bn slate of international debt issuances the ministry wants to make before the end of its current fiscal year in June 2026. Also in the package are Panda bonds, green bonds, and Eurobonds.

The country’s efforts didn’t go unnoticed

The macroeconomic turnaround was validated by international rating agencies, with S&P Global raising Egypt’s long-term sovereign credit rating to B from B-. This upgrade, the first of its kind since 2018, was followed by a positive outlook from Moody’s. These improved ratings were instrumental in lowering the risk premium on Egyptian debt, allowing the state to diversify its borrowing into new markets.

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