Egypt to fund most of FY 2026/27 needs at home

The Finance Ministry plans to source 89-93% of its FY 2026/27 financing needs from the domestic market, with external borrowing accounting for just 6-9%, according to the ministry’s annual borrowing strategy seen by EnterpriseAM. Other sources, including asset monetization proceeds, are expected to cover the remaining c. 0.5-0.8%.

Cheaper money will dominate the external mix: Concessional and semi-concessional loans and budget support are expected to provide 66-72% of external borrowing, with international issuances accounting for the remaining 28-34%. The latter could include conventional Eurobonds, sovereign sukuk, private placements, guaranteed issuances, Panda bonds, and sustainable finance instruments.

New external issuances will remain below external maturities, in line with the government’s objective of reducing the net external debt balance. Egypt faces around USD 2.9 bn in international bond and debt-instrument maturities this fiscal year, alongside some USD 3.4 bn in concessional-loan repayments. The calendar includes USD 515.7 mn-equivalent in Panda bonds next October, USD 2 bn in conventional bonds in January 2027, and USD 369.1 mn-equivalent Samurai bonds in March 2027.

T-bills will continue to dominate local debt: The ministry expects T-bills to make up 72-75% of local debt this fiscal year, with T-bonds accounting for 15-20%. The ministry also plans to continue issuing EGP-denominated sukuk and retail bonds and to increase participation from fixed-income and money-market funds. The ministry aims to cut gross financing needs by another five percentage points of GDP during the current fiscal year, after reducing them by more than five percentage points last fiscal year.

Social bonds in the works: The government is also considering an additional USD 1 bn social bond issuance during 1H FY 2026/27 to help finance the second phase of Hayah Karima and the expansion of Universal Health Ins., a senior government official tells EnterpriseAM. The strategy also leaves the door open to green or social sukuk and sustainability bonds, depending on market conditions, investor appetite, and whether an issuance meets the ministry’s cost and risk targets.

REMEMBER- The potential sustainable issuances sit within the previously disclosed USD 3-4 bn international issuance envelope for FY 2026/27. Egypt closed the previous FY with USD 4 bn in international placements, including a USD 1.5 bn sovereign sukuk, its USD 1 bn debut social bond, and USD 500 mn-equivalent sustainability Samurai bonds. Local sukuk and retail bonds also widened the state’s funding toolkit in the previous fiscal year.

The government cut the budget sector’s external debt by around USD 2 bn, bringing it down to 19.6% of GDP in March 2026 from 21.8% in June 2025. Total budget-sector debt stood at 83.9% of GDP in March, down from its 96% peak in FY 2022/23, while the average maturity of the budget-sector debt portfolio rose to 10.52 years. The FY 2025/26 budget recorded an EGP 985.1 bn primary surplus — equivalent to 4.6% of GDP — alongside an overall deficit of 6.1%. Meanwhile, tax revenues rose 27.5% y-o-y to EGP 2.49 tn in the first 11 months of the last fiscal year.

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