Arab Finance: Fitch Ratings expects Egypt’s current account deficit to narrow to 2.7% of gross domestic product (GDP) in fiscal year (FY) 2026/2027 from around 3.4% in FY 2025/2026, the Egyptian cabinet announced.

The ratings agency considers the country’s external financing requirements manageable due to its range of funding sources, including foreign portfolio investments, international issuances, multilateral support, and foreign direct investment (FDI).

Foreign portfolio inflows reached around $20 billion over the past 12 months, while net FDI totaled $15.4 billion in 2025, according to Fitch.

Egypt’s external position has also been supported by remittances, which climbed 27.5% year on year (YoY) to a record $47.3 billion in FY 2025/2026.

Meanwhile, net international reserves reached $56.2 billion in July 2026, while the banking sector’s net foreign assets recovered to $11 billion in June. Fitch said these buffers offer some protection against short-term external pressures and volatility in foreign portfolio investment flows.

The agency also expects Egypt’s public debt to fall to 72.6% of GDP in FY 2026/2027 from approximately 79% in FY 2025/2026.

The projected decline reflects nominal GDP growth outpacing debt accumulation. Fitch also pointed to potential valuation gains from a stronger Egyptian pound and easing geopolitical risks, which could lower the local-currency value of external debt.

The forecasts are based on Fitch’s baseline assumption that tensions between the US and Iran will de-escalate.