Egypt has budgeted almost as much for interest as for everything else combined. Schools, hospitals and household support have to compete with that claim on public money.
The government’s creditors have a claim on almost half the state’s spending this year. The 2026/27 budget law allocates 46.6%, or 2.42 trillion Egyptian pounds, to interest out of 5.19 trillion pounds in expenditure. Interest alone absorbs almost 60% of projected revenue, and a further 2.81 trillion pounds in principal repayments sits outside that expenditure total.
Against this, the Finance Ministry’s detailed financial statement assigns 669.3 billion pounds to health and education together. Interest costs about 3.6 times as much. The comparison below retains the budget’s detailed functional allocations alongside the separately identified enacted totals. Jordan and Morocco provide regional comparisons from their enacted 2026 budgets, showing, in plain terms, the scale of Egypt’s commitment to its creditors.
Egypt’s largest allocation carries the innocuous label “general public services”, totaling 12.4% of GDP and about 58% of draft expenditure. Four-fifths of it is interest.
The category contains 99.2% of the interest recorded in the functional table. Its size therefore tells us much more about the cost of servicing debt than about services reaching the public.
The cost of paying creditors
Interest can be found under other functions. Housing and community amenities contains 12.7 billion pounds of recorded interest, about 7.2% of its allocation. Health and education contain smaller amounts. Subtracting these payments still leaves administration and other costs within each function; the remainder cannot simply be called money reaching a classroom or hospital ward.
Of the 141.7 billion pound increase in the government’s wage budget, 60.5 billion, or 42.7%, is booked under “general public services”. Health and education together receive a smaller increase, 54.7 billion pounds.
But interest is only part of the debt bill. Including principal repayments, the enacted budget sets aside 5.23 trillion pounds for creditors, or 63.9% of the broader 8.19 trillion pounds in total budget uses.
New borrowing supplies 49.1% of the budget’s resources, and the financing assumption behind the interest bill is that average Treasury bill and bond rates will fall from 22% to 18%. Yet CBE secondary-market observations in late October 2026 put annual Treasury-bill yields at roughly 24–25%.
The Finance Ministry’s own risk assessment estimates that a rise of one percentage point in interest rates would add about 120 billion pounds to domestic debt interest payments. Lower rates could, in theory, ease the cost as debt is refinanced, but turning that relief into better-funded schools and hospitals would still require a budgetary decision.
The financing problem also appears in the national accounts. Gross domestic saving fell from 6.1% of GDP in 2023/24 to 1.2% in 2024/25, according to the preliminary figures published by the Central Bank in July 2026. Investment, including inventory changes, amounted to 12.9% of GDP. A more recent study by the Egyptian Economic Association put savings at 1.2% of GDP.
Energy places another claim on foreign currency. Petroleum import payments rose from 19.5 billion dollars in 2024/25 to 24.9 billion in 2025/26, according to the Central Bank’s latest balance-of-payments release. Natural gas added 4.7 billion dollars and crude oil 1.9 billion, partly offset by a 1.2 billion fall in petroleum-product imports. The bank attributed the gas and crude increases to “larger imported quantities”. Export receipts also rose, but the petroleum trade deficit widened from 13.9 billion dollars to 18.3 billion.
Petroleum import payments rose from 19.5 billion dollars in 2024/25 to 24.9 billion dollars in 2025/26, according to the Central Bank’s latest balance-of-payments release. Natural gas accounted for 4.7 billion dollars of the increase and crude oil for 1.9 billion dollars; the bank attributed both increases to “larger imported quantities”. Export receipts also rose, but the petroleum trade deficit widened from 13.9 billion dollars to 18.3 billion dollars.
At the government’s so-called ”Egypt Forum” on October 22, 2026, Sisi defended borrowing to maintain energy supplies. Petroleum minister Karim Badawi estimated the import bill at 3.4 billion dollars a month at prevailing prices, while prime minister Mostafa Madbouly said oil had reached 110 dollars against the budget’s assumption of 75, presenting the only alternatives facing the government as “higher consumer prices, more borrowing, or buying less fuel and risking shortages”.
But Egypt is not alone in devoting a large part of its budget to creditors. For example, interest takes about 26% of India’s 2026/27 Union budget, according to PRS Legislative Research, and roughly 43% of Pakistan’s federal budget, according to the Institute of Policy Studies. Both figures exclude substantial state or provincial spending, so they illustrate the pressure debt places on central budgets without providing a ranking of the countries’ entire public sectors.
Borrowing by economic authorities adds another debt bill. A review by journalist Beesan Kassab traced loan-financed transport investment and the Finance Ministry guarantees behind it, citing the Treasury’s payment of obligations the National Authority for Tunnels could not meet in 2024/25. The current draft records a further 337.4 billion pounds in interest and 407.1 billion in principal repayments at economic authorities. Across the wider general government figures, debt service reaches 5.97 trillion pounds.
The ministry’s statistical statement identifies 257.7 billion pounds of local and foreign loans to finance the tunnels authority’s investment this year, and during June’s parliamentary debate, MP Mahmoud Sami put the authority’s annual interest at 63 billion pounds against current expenditure of 74 billion, to which Transport Minister Kamel al-Wazir said that “the new loan would be repaid from project returns without a direct burden on the central budget.”
Government guarantees add another exposure. The budget package recorded 5.29 trillion pounds in net guarantees as of September 30, 2025, including 3.13 trillion for the state-owned Egyptian General Petroleum Corporation and 307.5 billion for electricity companies. It also lists 540.2 billion for the tunnels authority, 135.3 billion for the railways, and 381.1 billion for the New Urban Communities Authority.
At the forum, Badawi separately put petroleum sector debt at 1.6 trillion pounds at the end of June 2026, without providing a breakdown by creditor or identifying how much was interest on debt.
Meanwhile, some settlements use public assets instead of cash. On August 28, the Planning Ministry announced an agreement to waive 51.4 billion pounds in accumulated interest and penalties owed by the National Media Authority, and settle a further 88.3 billion through assets. It specified 44 authority properties valued at 18.06 billion pounds, with state land covering the balance.
The burden of raising the money is uneven, too. The Egyptian Initiative for Personal Rights (EIPR) calculates that VAT and payroll taxes supply 44% of Egypt’s projected tax receipts. Profit-oriented corporations contribute about 14%, with petroleum-sector and Suez Canal receipts recorded separately; property taxes contribute 0.5%. Consumption and wages carry a large part of the financing burden, while taxes on property bring in very little.
Schools, hospitals & household bills
Egypt’s draft assigns 367.3 billion pounds to education and 302 billion pounds to health. Together they amount to just 2.7% of GDP, compared with 6.2% in Jordan’s functional allocations and 8.7% in Morocco’s citizen budget. Within these budget boundaries, Egypt’s combined allocation is less than half Jordan’s and roughly a third of Morocco’s.
The accounting is contested itself as well. The totals used to claim compliance with constitutional spending requirements are much larger than the functional allocations used in this comparison. The difference for health and education together is 1.41 trillion pounds.
For example, education’s share of the economy has fallen over the past decade, to 1.54% of GDP in 2025/26, down from 3.78% in 2014/15. The 2025/26 allocation was 315 billion pounds, a nominal increase of 6.7% over the preceding budget.
There are different choices within the region. The comparison by Médias24 of Morocco’s ministry budgets records 2026 operating increases of 14.7% for national education and 18.2% for health, alongside an increase in health investment from 9 billion dirhams to 14.5 billion.
Even a larger nominal allocation needs to cover rising costs and growing demand. In South Africa, for instance, the Institute for Economic Justice finds that non-interest spending for 2026/27 is 5.2 billion South African rands (about 16.6 billion pounds) below the amount planned a year earlier, and argues that austerity remains in place.
Classroom deliveries, which have slowed, give the funding a physical measure. The education ministry’s 2024 construction figures record 21,869 classrooms delivered in 2021/22 and 9,182 in 2022/23, a 58% fall.
Also, recruitment rules affect who reaches those classrooms. As the current school year was coming to a start, EIPR documented the exclusion of applicants who had passed professional tests but failed additional military academy checks, including assessments of weight and physical fitness. The ministry said 43,400 applicants had passed tests and courses out of a total of over 100,000 applicants, but they still faced contracting requirements before taking up posts.
The government enters this budget with a serious learning shortfall already in place. The 2023 LaNA assessment, published in 2025, found that only 34% of Egyptian pupils tested at the beginning of Grade 5 reached the PIRLS Low reading benchmark of 400 points; 51% reached the corresponding TIMSS Low benchmark in math.
The gaps start before primary school as well. In its March 2026 account of Egypt’s literacy, UNICEF said fewer than one in four kindergarten-aged children attended “government-certified classes,” and about half attended non-formal private or community preschools, which it described as largely unregulated.
For health, a broader comparison is possible. World Health Organization (WHO) health accounts cover government revenues and compulsory insurance contributions across all eight countries. In 2023, the latest common year with observations, this public financing amounted to 1.6% of GDP in Egypt, against 3.4% in both Jordan and Morocco, 4.3% in Tunisia and 5.5% in South Africa.
Compounding that lack of public financing, Egyptian households paid 57.2% of current health spending out of pocket, the highest share among the eight. The equivalent shares were 34.5% in Jordan and 37.3% in Morocco. In South Africa, where government financing was much larger, direct household payments accounted for 6.7%.
And while a low out-of-pocket share alone cannot establish equal access to care, Egypt’s figure shows how much financing is collected from patients when they need treatment.
Export support & the industrial base
Export subsidies are one budget line within a much larger problem of industrial development. The financial statement provides 48.043 billion pounds, against 44.5 billion in 2025/26: an increase of 8.0%, but what matters is the productive base on which that support is supposed to work.
CAPMAS figures put Egypt’s fully manufactured goods exports at 27.803 billion dollars in 2025 and semi-manufactured goods at 13.596 billion dollars, out of 52.009 billion dollars in total goods exports.
A common trade classification gives Egypt a much smaller manufactured share than Turkey. In the UN Comtrade series published through the World Bank, manufactures made up 47.8% of Egypt’s merchandise exports in 2025, against 74.5% in Turkey, a 26.7% gap. Egypt’s share was also below its 51.7% in 2015.
Thus, the subsidy increase comes against a background in which manufactures account for a smaller share of Egypt’s goods exports than they did a decade earlier.
Meanwhile, few small businesses have a bank loan. The World Bank’s Enterprise Survey for Egypt found that just 2.5% of firms with 5–19 workers had a bank loan or line of credit, against 27.2% of medium-sized firms and 28.6% of large firms. It also classified 27.9% of small firms as “fully or partly credit constrained.”
Between September 2025 and January 2026, researchers interviewed 1,024 formal businesses. The survey included manufacturing and selected service sectors, while excluding informal businesses and firms with fewer than five workers.
Cash support: Small increase & fewer households
Cash assistance is where budgetary restraint meets households already living with poverty. Egypt’s flagship social protection and cash transfer program, Takaful and Karama, has a planned allocation of 55.2 billion pounds, only 2% above the preceding budget, and lists 4.7 million recipient households, 500,000 fewer than before. EIPR sets the small allocation increase against inflation averaging 11.3% in the first ten months of 2025/26.
Moreover, the lower planned caseload matters as much as the allocation. The government does not identify which families have actually been removed, why they lost eligibility, or what continuing recipients will receive. A 2% increase in the total is not a statement about each family’s payment.
In her August 2025 investigation, Beesan Kassab reported that the unpublished 2021/22 survey put 34% of Egyptians below the national poverty line, up from 29.7% in 2019/20. Extreme poverty rose from 4.5% to 5.81%. Three informed sources, including two in government, described the survey results, and analysis of the available half of the microdata estimated national poverty at 33.5%.
Another independent study, published in May 2025, put national poverty at 33.95% in 2022.
For the years since that survey, the World Bank’s October 2026 outlook estimates that poverty at its 4.20 dollars-a-day line, measured at 2021 purchasing power parity, rose from 7.1% in 2021/22 to 12.6% in 2023/24. It projects 12.5% for 2025/26 and 12.4% for 2026/27.
Saving is also sharply divided by income, as a recent World Bank Global Findex survey shows that 12.8% of adults in Egypt’s poorest 40% of households reported saving any money in the previous year, compared with 29.8% in the higher-income 60%. Across all income groups, just 23% of adults reported saving through any method; 13.8% had saved through a bank, similar financial institution, or mobile money account.
Meanwhile, the subsidy chapter in the state’s budget can make the household commitment look larger than it is, as it combines assistance to businesses, including export support—which appears under the same “subsidies, grants, and social benefits” heading—with household payments, while its energy lines move in opposite directions: compared with the previous budget, the draft cuts petroleum subsidies by about 79%, from 75.03 billion pounds to 15.84 billion, while increasing electricity subsidies from 75 billion to 104.16 billion.
At the forum, finance minister Ahmed Kouchouk put “support” at roughly 840 billion pounds, then added an assumed borrowing cost of 20% to describe a bill near a trillion, but the actually enacted support chapter is 836.8 billion pounds, and interest has its own appropriation. His calculation illustrates a financing cost, which does not establish an extra allocation for beneficiaries, and adding it to the full interest bill would count the financing cost twice.
Pension settlements provide another example of a liability financed partly through future obligations. The budget also contains 169.2 billion pounds in cash toward a 254.2 billion pound annual Treasury obligation to the National Organization for Social Insurance (NOSI), with the remaining 85 billion to be paid in bonds bearing market interest, financing pension rights by settling a government liability. Issuing bonds postpones cash payment and adds future interest costs. Another table in the budget lists a 240.7 billion pound transfer to the insurer, leaving a 13.5 billion difference that the published schedules do not explain.
Egypt commits about 0.23% of GDP to its social protection program. Jordan’s 2026 budget tables put family cash assistance at about 0.61%; Morocco’s social-assistance agency puts annual direct benefits at about 1.60%, all of which are markedly different commitments, even before asking how many people qualify.
The payment rules help explain what the totals leave out. Jordan’s National Aid Fund lists monthly unified cash support of 40–136 Jordanian dinars (around 3,000–10,100 Egyptian pounds) per household, subject to a means test. Morocco’s benefit schedule guarantees eligible households at least 500 Moroccan dirhams (around 2,700 pounds) a month and raises the allowance for each of the first three young or school-going children from 250 dirhams in 2025 to 300 dirhams in 2026.
How Egyptians rate their lives
The World Happiness Report’s 2026 data put Egypt’s average life evaluation at 3.86 out of ten over 2023–2025, against 4.48 in Jordan, 4.65 in Morocco and 4.80 in Tunisia. Egypt scores lowest among the eight selected countries despite having the highest estimated GDP per person at purchasing power parity in 2025.
So, what now?
As the statistics presented above show, the Egyptian state budget is geared towards paying installments and interest on an accumulating debt. Very little is left for education, health and public services, or even for spending that capitalism itself depends on, such as research and development. The result is a near-permanent policy of austerity and an ever-growing share of the population pushed below the poverty line.
This has been a chronic feature of the Egyptian economy since at least the 1970s, if not earlier, and its causes do not lie simply in the class bias of government policy or in the neoliberal agenda dictated by the international financial institutions.
Until the early 1950s, the project of turning Egypt into an independent center of capitalist accumulation was held back by three major obstacles: continued British occupation and Britain’s effective control over Egyptian policy-making; the stranglehold of the large landowners over the economy, which made radical land reform and redistribution urgent; and a weak, corrupt monarchy.
Yet all three were overcome in the early years of the Nasser regime. Land reform began in 1952, the monarchy was abolished in 1953, the last British troops left the Suez Canal Zone in June 1956, and the Anglo-French-Israeli invasion later that year ended in withdrawal. The stage was set for a state-led program of modernization and industrialization based on import substitution.
This was not a choice unique to Egypt’s military regime. It was the economic path followed by most governments of the Global South in the post-colonial period. An early precedent was Atatürk’s Turkey, which in 1934 launched a Soviet-style five-year plan for import-substituting industrialization with direct Soviet assistance.
Similarly, the Nasserist regime launched an ambitious five-year plan for 1960–65, and Egypt did seem set on a path of successful industrialization and what was called ‘socialist’ construction—the ‘socialist’ label was used across the Global South to describe what was, in substance, state-capitalist industrialization. In Egypt, however, this process was severely curtailed by a number of serious obstacles.
First, the regime’s regional ambitions far outstripped its economic and military capabilities. This was demonstrated by the five-year war in Yemen (1962–67), which, as Nasser himself conceded in a conversation with his Libyan counterpart Muammar Gaddafi, was disastrous for the Egyptian army and contributed to the defeat by Israel in the Six-Day War of 1967.
Second, and more immediately, the plan ran into financial difficulties very early on. The cost of importing machinery for the new industries far exceeded the value of exports, which went largely to the Soviet Union and the Eastern Bloc. The pound had already been devalued in September 1949, and Egypt’s borrowing from the IMF also preceded the plan, as in March 1962, the Fund approved a new 7.5 million dollar drawing to offset a repayment on earlier drawings from 1956 and 1957. However, 1962 was truly the first crisis negotiation with the Fund, when a 42.5 million dollar standby arrangement followed in May of that year, and Egypt drew the full amount.
IMF loan agreements and devaluations would recur under successive regimes, essentially becoming permanent features of Egyptian economic policy, while the attempt to build an independent industrial base continued to run up against the shortage of foreign currency.
Third, the plan suffered from poor coordination. The apparent concentration of power in Nasser’s hands concealed an intense power struggle with Field Marshal Abdel Hakim Amer. This struggle was reflected in a multiplicity of decision-making centers across ministries, planning committees and advisers, which caused major delays, inefficiencies, and bottlenecks. The cumulative result was only a partial and patchy fulfilment of the plan’s goals, and the second five-year plan was never implemented.
In the 1970s, the Sadat regime abandoned the attempt to industrialize through import substitution for the domestic market. Instead, it sought to attract foreign investment, particularly from the oil-rich Gulf states, alongside US and European aid, in the hope that this would boost exports and relieve the ever-present shortage of foreign currency. The Sadat era did see some years of rapid growth, but this came mainly from rents: remittances from Egyptian migrant workers in the Gulf, oil exports, Suez Canal revenues and tourism. There was no significant increase in exports of manufactured goods. The industrial structure stagnated, and the large public-sector industries remained heavily indebted.
Stagnation continued through the 1980s, Mubarak’s first decade in power. Meanwhile, several countries of the Global South had achieved rapid growth by shifting from import-substitution industrialization to export-oriented industrialization. South Korea and Taiwan had made this shift in the 1960s, while Hong Kong and Singapore built their economies on export manufacturing almost from the outset. By exporting manufactured goods to the US and Europe, at first mainly textiles and clothing, and relying on the advantage of low wages, these economies built up their industrial base. They earned enough foreign currency to invest in machinery and technical development, and began moving up the value chain towards more capital-intensive industries. By the 1980s they were being followed by Malaysia, Thailand and, above all, China.
In Latin America, however, the record was more mixed: Brazil and Mexico, after rapid industrial growth in the 1960s and 1970s, were plunged into the debt crisis of the 1980s.
In Egypt, by contrast, stagnation turned into a severe financial crisis in the late 1980s, and default was averted only after Egypt joined the US-led coalition in the 1991 Gulf War, in return for which half of its foreign debt was forgiven.
By the early 1990s, with the collapse of the Soviet Union, neoliberalism—the dismantling of state capitalism through privatization and the liberalization of trade—had become the dominant ideology of economic policy in both the industrialized countries and the Global South.
In the Global South, this took the form of “structural adjustment” programs supervised by the US-dominated international financial institutions, mainly the IMF and the World Bank. Privatization, trade liberalisation through the removal of tariffs and other barriers, and the gradual elimination of subsidies for the poor were adopted almost universally. This was despite the fact that the celebrated success stories of East Asia rested on strong state direction of the economy. In South Korea, for example, even the largest private conglomerates followed strict guidelines set by state planning institutions.
The “Washington Consensus” became the new orthodoxy among Egyptian economic policymakers in the 1990s and early 2000s. The formula was simple: privatize the ailing, stagnant public-sector companies, sharply cut corporate taxes, eliminate state subsidies, liberalize prices and attract local and foreign private investment by any means necessary, and Egypt would become, in the words of then notoriously corrupt finance minister Youssef Boutros-Ghali, “a tiger on the Nile”.
Yet despite following these policies religiously, the Egyptian economy sank ever deeper into the debt trap, lurching from one financial crisis to the next. The competitiveness of Egyptian industry, measured for example by manufacturing exports, continued to deteriorate. Trade and budget deficits grew rapidly, leading to near-permanent austerity and severe cuts to spending on education, health, research and development and industrial infrastructure. That, in turn, made it harder to compete internationally.
For Boutros-Ghali and his disciples, such as Mahmoud Mohieldin and Ziad Bahaa-Eldin, the reason Egypt failed to make its “tiger-like” leap was the resistance of the state bureaucracy and the slow pace of reform. If only the private sector and international capital were given the freedom they needed, if only the shackles of laws, regulations, taxes and state interference were removed, Egypt would become the new Singapore.
These neoliberal clowns kept blaming bureaucratic resistance. Meanwhile, a whole series of developments seemed to fly far above the heads of the Mubarak-era economists: the global recession of 2008, the international retreat from the Washington Consensus, the spectacular rise of Chinese state capitalism without a hint of neoliberalism, and the retreat of globalization alongside the return of economic nationalism.
Others, notably successive presidents of the republic, blamed population growth, with remarkably similar arguments across the different eras: we would have become a rich, developed country if only the population would stop growing so fast, that is, if only the poor would stop having so many children. Our plans were perfect and our policies correct, but what can we do with so many mouths to feed? That was Nasser’s argument when Egypt’s population was around 30 million in the 1960s. It was Sadat’s when it reached 40 million at the end of the 1970s, Mubarak’s when it approached 80 million towards the end of his long reign, and it is Sisi’s now that it has passed 100 million. Sisi also likes to cite the much-disputed figure of 9 million foreign migrants and refugees in Egypt as a contributing cause of the crisis, but that’s an argument for another time.
In fact, Egypt has undergone a process of premature deindustrialization. Several developments combined to produce it. The state retreated from investment in industry, whether of the import-substitution or the export-promotion variety. Egypt failed to attract serious foreign direct investment into productive sectors. Labor productivity, education, health, and vital infrastructure fell further behind those of competing economies. And mounting foreign debt left the state in permanent financial crisis. These developments were important contributors to the revolutionary crisis of 2011–13, and all of them have accelerated since the military coup of 2013.
Over the past decade, the military’s role in the economy has grown, always in cooperation and alliance with Egyptian private capital and foreign investors. Egyptian industry has continued to fall behind, and the financial crisis and its budgetary consequences have produced unprecedented impoverishment, forcing millions more Egyptians below the poverty line. Now some of the neoliberal geniuses of the past are playing a new tune, or rather a new version of the old one: if only the military stopped interfering in the economy, if only it stopped competing with the private sector, the long-awaited leap would come.
What they quietly ignore is that the large private corporations have been amassing unprecedented profits through deals and joint projects with the military.
Indeed, one of the most obscene features of the current crisis is the simultaneous impoverishment of a growing share of the population and the vast wealth accumulated by the ruling coalition of generals, local businessmen and Gulf capitalists. This obscenity defines the brutality of Sisi’s dictatorship.
Perhaps one of the problems facing many critics of the regime’s economic policies is an inability to think beyond the bounds of capitalism: a case of TINA, “there is no alternative”.
A return to state-led development and import-substitution industrialization is no longer an option in the current phase of world capitalism; autarky, or “delinking”, cannot solve the problems of the Egyptian economy. But export promotion, an attempt to break into the world market through manufactured exports, is not a viable option either.
The dilemma is fundamentally circular and vicious. Any competitive breakthrough demands large-scale investment in education, modern machinery, research and development, and industrial infrastructure. Yet financing that capital buildup presupposes healthy trade and budget surpluses alongside a steady inflow of foreign exchange—the very surpluses that only an established, high-value manufacturing export base could generate in the first place.
Maybe the way out of this dilemma is to start imagining a path beyond capitalism, whether in its state form, military or civilian, or in its currently failing neoliberal, globalized version.
Perhaps it was this imagination that was missing during the 2011 revolution.
Perhaps we need at least to begin thinking about a new revolution: one that, instead of trying to solve the crisis of capitalist accumulation in Egypt, which has given us only poverty, dictatorship, corruption, complicity in genocide and obscene wealth, could take the first steps towards a serious challenge to both imperialism and capitalism.