The Finance Ministry unveiled its 2026–2030 medium-term strategy, focusing on curbing public debt and encouraging private sector growth, according to a strategy document reviewed by EnterpriseAM. The strategy pivots away from emergency fiscal management toward a period of consolidation and “balanced” growth.

The strategy sees the economy growing 5-6% each year over the medium term, driven by stronger private investment and non-oil exports as inflation cools and interest rates decline.

On the fiscal front, the ministry aims to raise revenues gradually to 16.5% of GDP in the coming fiscal year, targeting 17.4% by FY 2029-30. State revenues will be supported by improving tax revenues, projected to reach 15.2% of GDP by the end of the period. At the same time, growth in public spending is expected to slow from 22% in FY 2023-24 to 21.4% by FY 2029-30.

These measures are expected to narrow the budget deficit to 4.9% of GDP starting next fiscal year, down from about 7% in the current fiscal year, while bringing the general government debt down to 65.4% of GDP from 79.1%.

The ministry expects growth to recover to 5.3% next fiscal year, accelerating to 6.2% by FY 2029-30, supported by an expanded industrial base, rising private investment, stronger manufacturing and tourism activity, and the launch of major projects along the Red Sea and Mediterranean coasts.

Taxation and the private sector

Efficiency over hikes: The ministry thinks reforms will help tax revenues for the state rise to 1% of GDP without an increase in tax rates. Instead, it will focus on phasing out exemptions with limited inflationary impact to help finance more effective social protection programs and streamlining fees for businesses and investors into just three categories: operating, licensing, and establishment.

Leveling the playing field: The strategy affirms commitment to expanding the role of the private sector, including a cap on public investment while reducing debt servicing costs to around 35% of GDP. This will be achieved through greater reliance on concessional external financing, which is expected to account for 60% of issuances, as well as debt swaps and debt-for-investment arrangements.

Debt management

The strategy assumes a decline in yields on government debt instruments, with average returns expected to fall to 17% in the next fiscal year and to around 12% by the end of the medium term, alongside a slowdown in economic deflation to 7.5% from 11.5%.

The ministry also plans to extend the average maturity of public debt to 4.5–5 years, expand the use of non-traditional instruments such as sukuk and retail bonds, introduce longer-term and floating-rate local instruments, and activate the secondary market through buybacks and swaps.

On the social development side

The strategy prioritizes human and social development, directing any fiscal surpluses toward higher spending on healthcare and education. It paves the way for further development of a clear roadmap for universal health ins. by June 2026, expanding coverage to underserved groups, and addressing energy security and global risk factors over the medium term.

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