Egypt’s financing needs remain a key vulnerability despite its improving macroeconomic position, according to the IMF’s newly released staff report for the seventh review of the country’s program with the Fund, issued last Thursday and seen by EnterpriseAM. The review cleared a USD 1.8 bn disbursement from the Fund earlier this month. The report outlined the country’s fiscal standing, noting that Egypt entered the current period of regional conflict with a stronger macroeconomic position compared to prior crises, but challenges remain.

The debt picture: Gross financing needs are expected to peak at around 42% of GDP in FY 2025/26, while public debt is projected at 91.1% of GDP before falling to below 75% by 2031, mainly through sustained primary surpluses.

The government is trying to reduce refinancing risks: The average maturity of new issuances rose to 1.1 years by the end of June, the highest level in three years, following a recovery in T-bill issuances in May and the successful issuance of 10-year bonds in June. It remains below the program target, however. The government agreed to reach a T-bond issuance ratio of 1.25 by the end of September and reduce the outstanding balance of Finance Ministry paper issued to the private sector to EGP 375 bn.

Banks remain resilient, but their sovereign exposure is high: The Fund characterized the banking sector as well-capitalized and highly profitable, with few non-performing loans and no immediate signs of financial stress from the war. Commercial banks’ exposure to the central bank stood at 35% of total assets at the end of 2025, the second-highest level in the region. The Finance Ministry also intends to reduce its overdraft balance with the Central Bank of Egypt (CBE) by EGP 100 bn annually, reaching zero by 2029.

The Egyptian General Petroleum Corporation (EGPC) remains another fiscal risk. The state energy company aims to achieve positive cashflows and reduce government guarantees by 25% by FY 2026/27. Meanwhile, under the IMF’s adverse scenario, where global oil prices rise to USD 103 per barrel, inflation could climb to around 19.5%, causing growth to slow, requiring tighter monetary policy and continued reserve building.

More assets are heading to market: Egypt raised more than USD 500 mn from asset sales by July 2026, including USD 420 mn from Gabal El Zeit, with a 20% stake in Misr Life Ins. expected to be sold by late August. The IMF called the revised 2026-2030 State Ownership Policy a “paradigm shift,” moving from a sector-based approach to a comprehensive framework for managing state ownership. Preparations are also underway to grant management concessions for 11 airports.

What’s next? Egypt’s eighth and final review is expected in mid-November, alongside the completion of the remaining tranches under the Resilience and Sustainability Facility.

The long-awaited IPO

The government has reached the final stretch in its plans to debut a 20% stake in Misr Life Ins. on the EGX, targeting the receipt of transaction proceeds by late August 2026. The state has secured all necessary regulatory approvals and finalized the technical and legal prerequisites for the landmark listing, according to the report. A transaction advisor was also selected via competitive tender to handle valuation, transaction structuring, documentation, and regulatory coordination.

Investors are already here: The European Bank for Reconstruction and Development (EBRD) is negotiating a potential pre-IPO acquisition of up to 5% in the IPO-hopeful, with all parties signing a non-disclosure agreement to exchange data.

One of six: Besides the EBRD, there are five global, Arab, and African investment institutions competing for a 10% private placement tranche of the IPO, according to an unnamed government official. The lineup of bidders negotiating with the financial advisor includes the International Finance Corporation — with a final agreement expected within days — alongside four regional and continental investment funds.

Taxing freezone backdoors

The government is targeting a flat tax of up to 4% on goods sold into the domestic market from freezones via new legislation, according to the IMF’s program review report. The levy replaces an earlier withholding tax proposal — estimated by the Fund to yield 0.1% of GDP — that faced delays. Publication in the official gazette is targeted for late November.

To cover the initial revenue gap, the government introduced alternative measures in its second tax package — a tax on same-day stock trading, unified EGP 100 departure fees, higher cement taxes, and redirecting freezone fees to the state treasury. These support a broader two-year reform program targeting 2% of GDP in revenues through VAT exemption cuts (including commercial real estate rents in June), new taxes on state-owned enterprise net income, corporate incentive streamings, and digital risk-based audits.

Still under review: Despite the IMF calling the levy a necessary structural measure, a senior government official tells EnterpriseAM that the draft bill is still undergoing internal review at the ministries of finance, investment, and planning, and was excluded from the second tax facilitation package.

The details: The proposed tax applies strictly to local sales, keeping export-bound goods tax-exempt to protect freezone status, according to the official, who notes that while Egypt may be foregoing direct tax revenue by skipping Pillar 2 of the OECD framework — which establishes a 15% minimum tax rate on freezone entities — freezones provide larger gains through localized manufacturing, FDI, job creation, local feeder reliance, and cheaper alternatives to foreign imports. Submission to parliament hinges on an upcoming impact assessment to measure expected yields, prevent capital flight, and preserve investor appetite.

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