The Finance Ministry will unveil its new public debt management strategy later this month, a senior government source tells EnterpriseAM. The rollout comes after a year-long delay triggered by volatility in global debt markets. The strategy will focus on long-term structural debt reduction and helping the government diversify its financing sources in coordination with international advisors.

Why it matters: Debt servicing currently eats up a huge chunk of the government’s annual spending — interest payments jumped 45.2% y-o-y to EGP 1.06 tn in the first five months of the current fiscal year. The strategy presents an attempt at slashing the debt-to-GDP ratio and pivoting toward concessional financing in line with IMF targets.

To kick things off, the ministry plans to take its first local green bonds to market in 1Q 2026 once technical arrangements are finalized, according to our source. Proceeds will go towards climate adaptation projects and boosting environmental compliance as part of a state mandate to direct 50% of public investment toward green initiatives.

The long-term plan: The goal is to shift away from high-cost commercial debt and toward concessional loans and expanding debt-for-investment swaps. The government is targeting an external debt ceiling of 40-45% of GDP to stay in the IMF’s good graces.

Want more? For a deeper dive into the strategy, check out our previous coverage.

External debt gets a dedicated desk: The Finance Ministry has set up a specialized department dedicated to planning external borrowing.

Where’s the retail bond market we were expecting to launch in 2025? The ministry is working to launch the dedicated bond market for individuals and Egyptian expats this year, allowing them to directly invest in public debt instruments without the need for intermediaries, our source added. The move will require legislative and regulatory amendments.

IN OTHER DEBT NEWS- The Finance Ministry raised EGP 3 bn in three-year local sukuk yesterday, missing its target of EGP 7 bn, according to central bank data. The sukuk were sold at an average yield of 21.09%.

In a bid to boost demand for the debt instrument, the new strategy aims to diversify sukuk tenors to counter low demand caused by yields that currently sit 6-7 percentage points below traditional debt instruments. Expect new short-term sukuk to hit into the market soon to draw in liquidity by attracting new segments of investors.

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