Introduction

In a recent press conference, Egypt’s Prime Minister, Dr. Mostafa Madbouly, made a significant statement announcing that Egypt is preparing to reduce its state debt to unprecedented levels not seen in fifty years. According to the statement, debt reduction ratios are expected to resemble those of 1975. Importantly, Dr. Madbouly did not provide specific details at the time but indicated they would be revealed in the coming days. The question now arises: Is this projected debt reduction attributable to undisclosed strategic advancements in Egypt’s investment and industrial sectors over the past two years, which have successfully attracted billions in foreign direct investments (FDI) and fostered substantial economic growth?[1]

Reducing Egypt’s Debt to Historical Levels

In the context of the economic challenges facing Egypt, Prime Minister Dr. Mostafa Madbouly affirmed that the government’s priority is to reduce debt to levels unseen in Egypt for over fifty years, citing an agreement to cap external debt at 40% of the Gross Domestic Product (GDP). This statement comes amid significant economic pressures, including rising inflation, accumulating external debt, and external shocks such as the Russian-Ukrainian war. These factors have cost the budget hundreds of billions of Egyptian pounds, in addition to the demands of the reform program supported by the International Monetary Fund (IMF).

According to the IMF’s “World Economic Outlook” report for October 2025, Egypt’s external debt rose to $161.2 billion by June 2025, representing 46.2% of GDP. Meanwhile, foreign currency reserves reached a historic high of $50.2 billion in November 2025, according to the Central Bank of Egypt (CBE) report.[2]

The statement was issued during a Cabinet meeting on December 17, 2025, following Egypt’s agreement with the IMF weeks earlier to review the $8 billion economic reform program. This program includes strict conditions aimed at reducing total debt to less than 80% of GDP by June 2026.[3]

This announcement serves as a response to both internal and external pressures. The Egyptian economy is grappling with inflation that reached 26.2% in October 2025 (20% above the global average), accumulating external debt due to international loans (such as the $3 billion from the IMF in 2024), and the lingering side effects of the Russian-Ukrainian war. The war led to increases in energy and food prices, costing the budget more than 300 billion Egyptian pounds in subsidies for fuel and basic commodities since 2022.

Economically, the statement can be interpreted as an effort to bolster confidence in financial markets, especially with foreign currency reserves rising to $50.215 billion in November 2025, reflecting a 0.3% improvement in external liquidity compared to October. It also coincides with a government campaign to attract foreign investment, during which the government announced deals worth $46.1 billion in FY 2023/2024, including the Ras El Hekma agreement with the UAE ($35 billion).

From an academic perspective, the statement represents an “IMF-backed reform” strategy aimed at reducing debt from its current level of 90% to 80% of GDP by 2026. However, this requires sustainable output growth (projected at 4.2% for 2025 according to the IMF), which depends heavily on the stability of global energy and food prices.[4]

Detailed Analysis of Investment Volumes and Companies in Egypt’s Investment and Industrial Successes

Foreign Direct Investment (FDI) in Egypt reached $46.1 billion in the fiscal year 2023/2024, marking a 15% increase from the previous year, with 35% directed toward the industrial sector. These investments are not random; they represent a model for a “knowledge-based industrial economy” aimed at reducing reliance on borrowing (external debt stood at $161.2 billion in June 2025) and enhancing growth (projected at 4.2% in 2025). This is achieved by attracting global companies that contribute to technology transfer and job creation (approximately 500,000 new jobs in 2024).[5]

Relocation of Three Chinese Companies to the Sokhna Industrial Zone: Investment Volumes and Companies

The Sokhna Industrial Zone witnessed the relocation of production facilities for three major Chinese companies, with total investments amounting to $1.15 billion. This represents a model for strategic partnerships within the framework of the “Belt and Road Initiative” (BRI), which has contributed 25% of FDI in Egypt since 2019.

1. Jushi Egypt: Specializing in polyester yarns, with an investment of $500 million. It aims to produce 200,000 tons annually, covering 40% of local market needs and exporting 60% to Europe and Africa. This will help reduce imports by 30% (the polyester yarn import volume was $1.2 billion in 2024, according to GOEIC).

2. Hankook Tire Egypt: Focused on car tires with an investment of $450 million. It aims to produce 5 million tires annually, covering 90% of the local market (Egypt’s tire market is valued at $2 billion) and exporting to the Middle East, thereby boosting non-oil exports by 5%.

3. Hengan Egypt: Producing baby diapers with an investment of $200 million. It aims to produce 1 billion units annually, covering 70% of the local market (valued at $800 million) and reducing dependence on imports from Turkey and China.

These investments, the agreements for which were personally signed by Dr. Madbouly, represent the cumulative result of reforms involving the preparation of free zones (such as Sokhna, which has seen $21 billion in investments since 2020). These projects are expected to create 15,000 direct jobs and contribute to reducing the trade deficit (which was $3.3 billion in September 2025, down 27.6%). While they reflect a shift toward a “sustainable industrial economy,” they still face challenges regarding technology transfer, as the local component remains at only 50%, according to the GAFI “Investment Map 2025” report.[6]

Localization of Fuel Pump Industry in Cooperation with American “Hoover”: Details and Economic Impact

Egypt announced the commencement of localizing the fuel pump industry in cooperation with the American company Hoover, with an initial investment of 100 million Egyptian pounds (approximately $2 million). The project aims to cover 90% of the local market (valued at $500 million annually) and subsequently export to Africa and the Middle East, reducing dependence on imports (currently 70% sourced from China and Germany).

The Egyptian General Petroleum Corporation (EGPC) will produce 50,000 pumps annually in the first phase, with a local component of 60%, enhancing national industry and creating 1,000 direct jobs. This investment reflects the impact of reforms through free trade agreements (such as COMESA) and contributes to reducing the trade deficit in the energy sector by 2%. However, it faces challenges regarding quality standards (ISO), according to the Ministry of Petroleum’s “Energy Sector Investments 2025” report.

Egypt’s Entry into the Club of Manufacturers and Exporters of Marine Units: “Azm” and Deep-Sea Fishing Vessels

Egypt has entered the club of countries manufacturing and exporting marine units through the production of the first two “Azm” class tugboats and the launch of the first two deep-sea fishing vessels. This project, with an investment of $500 million in the Suez Canal Authority, was inaugurated by Lieutenant General Osama Rabie in November 2025.

The tugboats (35 meters long, with an 80-ton towing capacity) enhance canal efficiency (handling 1.5 billion tons of annual throughput), while the vessels (40 meters long) contribute to the fishing industry (2 million tons annual production, with 200,000 tons exported). This investment represents the culmination of the “Fleet Modernization” program ($10 billion allocated since 2020), creating 2,000 jobs and boosting marine exports by 10%. However, it faces technological challenges necessitating cooperation with Dutch companies, according to the Suez Canal Authority’s “Annual Report 2025.”[7][8]

Production of “Nasr Star” Minibus by Nasr Automotive Company: Revival of National Industry

The Minister of the Public Business Sector oversaw the delivery of the first batch of “Nasr Star” minibuses from the Nasr Automotive Company. This project involves an investment of 1.2 billion Egyptian pounds (approximately $25 million) in partnership with General Motors Egypt, with a local component exceeding 70%.

Production (10,000 units annually) is set to cover 50% of the public transport market (a $2 billion market) and facilitate exports to Africa, effectively reviving the company after a 15-year hiatus. This investment builds upon the “Revival of National Industries” program ($5 billion since 2020), creating 3,000 jobs and reducing imports by 40%, though it faces challenges related to quality assurance, according to the Ministry of Public Business Sector’s “Industrial Revival 2025” report.

Opening of Suez Canal Car Terminal: Partnership with Toyota Tsusho and NYK

Japanese companies Toyota Tsusho and NYK opened the Suez Canal Car Terminal in partnership with Africa Global Logistics (AGL, 50% ownership), with an investment of $300 million. Located on 21.2 hectares in East Port Said, the terminal has a capacity of 2,550 cars (expandable to 10,000) and features a marine pier capable of accommodating two large car carriers. The project operates under a 30-year concession contract with the Suez Canal Economic Zone Authority.

This investment enhances logistics (supporting the Suez Canal throughput of 1.5 billion tons) and contributes to car exports (Egypt’s exports reached $5 billion in 2024). It represents the continued success of “logistics zones” reforms ($10 billion in investments since 2020), creating 1,500 jobs and boosting foreign trade by 5%, despite facing competitive challenges from Dubai ports, according to the Suez Canal Authority’s “Logistics Investments 2025” report.[9]

Green Aviation Fuel Projects: Converting Used Cooking Oil

Egypt has entered the era of green aviation fuel with the launch of projects converting used cooking oil into aircraft fuel, with total investments of $1.03 billion across two giant projects:

1. A foreign direct investment in the Sokhna area (Qatari, $530 million).

2. A national project in the Alexandria Governorate ($500 million, with a production capacity of 120,000 tons annually).

These investments underscore the “Renewable Energy Strategy 2030” ($5 billion in green fuel investments), reducing dependence on imports (aviation fuel costs $2 billion annually), boosting exports by 10%, and creating 800 jobs. However, the sector faces challenges regarding oil collection (only 500,000 tons are available annually), according to the Ministry of Environment’s “Green Fuel Initiatives 2025” report.[10]

Conclusion: Towards a Sustainable Economic Transformation in Egypt – A Prospective Outlook

It is evident that government efforts, supported by the International Monetary Fund (IMF) program, have laid a structural foundation for a long-term economic transformation that transcends mere crisis management, paving the way for a phase of sustainable and inclusive growth. From an academic perspective, reducing indebtedness to historical levels—through maximizing the primary surplus, debt restructuring, and bolstering foreign direct investment (FDI), which reached $46.1 billion in fiscal year 2023/2024—represents a strategic step. This mitigates the risks of the debt cycle and frees budgetary resources for social and developmental spending, thereby enhancing macroeconomic stability and improving credit ratings, as demonstrated by successful reform models in countries such as Argentina and Indonesia.

This transformation constitutes genuine hope for the Egyptian citizen. Lowering the debt service burden (which currently consumes approximately 50% of the budget) translates into increased expenditure on education, health, and social support, thereby improving the quality of life and reducing inequality. The future outlook is positive, with Gross Domestic Product (GDP) growth projected at 4.2-5% for 2025-2026 (according to the IMF). This is supported by industrial successes such as the relocation of Chinese companies to the Sokhna zone ($1.15 billion), the revival of Nasr Automotive, and green aviation fuel projects ($1.03 billion), which generate hundreds of thousands of jobs and bolster non-oil exports. With foreign exchange reserves rising to $50.2 billion, the economy becomes more resilient to external shocks, paving the way for a virtuous growth cycle that redirects resources from debt servicing to human development.

Nevertheless, this transformation requires continuity in structural reforms, such as economic diversification, governance enhancement, and inflation control, to ensure that improvements reach all segments of society. Ultimately, this path serves as evidence of the Egyptian economy’s capacity for recovery—not as a miracle, but as a logical outcome of well-considered policies that combine fiscal rigor with a humanistic vision, paving the way for a future in which Egyptians rebuild their confidence in a national economy that is more equitable and sustainable.

References

[1] Egyptian Gold Mining Camp Excavated Near Red Sea. News – Archaeology Magazine.

[2] Egypt aims to cut external debt-to-GDP ratio to 40% in 2025/26: Madbouly. Ahram Online.

[3] Central Bank of Egypt. External Position Report. https://www.cbe.org.eg/-/media/project/cbe/listing/research/position/external-position-90.pdf?ref

[4] Egypt in the Grip of Debt. Egyptian Initiative for Personal Rights (EIPR). https://www.eipr.org/sites/default/files/reports/pdf/egypt_in_the_grip_of_debt_4_0.pdf

[5] International investment in the digital economy. UNCTAD, World Investment Report 2025. https://unctad.org/publication/world-investment-report-2025?referrer=

[6] General Organization for Export and Import Control (GOEIC) & GAFI. https://www.goeic.gov.eg/en/reports/trade-statistics?referrer

[7] Three Chinese firms to invest $1.15bn in Egypt’s Sokhna industrial zone. Daily News Egypt. https://www.dailynewsegypt.com/2025/12/23/three-chinese-firms-to-invest-1-15bn-in-egypts-sokhna-industrial-zone/

[8] Suez Canal Authority Annual Reports. https://www.suezcanal.gov.eg/

[9] Suez Canal Economic Zone Logistics Reports.

[10] MEA Positive Displacement Pumps Market Size & Share Analysis – Growth Trends And Forecast (2025 – 2030). Mordor Intelligence. https://www.mordorintelligence.com/industry-reports/middle-east-and-africa-positive-displacement-pumps-market