The Egyptian General Petroleum Corporation (EGPC) accounts for the largest share of government sovereign guarantees, and its debts and short-term liabilities constitute one of the most significant fiscal risks to the state budget. It alone receives around 58–60% of all guarantees issued by the Ministry of Finance, with a value that reached approximately EGP 3.1 trillion as of September 2025, which the International Monetary Fund estimated at around 18% of gross domestic product.
By the end of June 2026, the total debt of Egypt’s petroleum sector had reached EGP 1.6 trillion, according to an announcement by Petroleum and Mineral Resources Minister Karim Badawi in response to a question from President Abdel Fattah al-Sisi during the “Egyptian Energy Journey: National Achievements and Future Prospects” session at the Egypt Forum 2026, held on 22 October.
Shortly before the IMF mission in November 2025, the Ministry of Finance paid EGPC EGP 451.8 billion. This included EGP 166 billion in overdue subsidy compensation, EGP 13.6 billion in obligations owed by the electricity and water ministries, and more than EGP 98 billion paid against guarantees of the corporation’s debts, in preparation for the IMF review and the completion of disbursements under the USD 8 billion loan.
As a result, by June 2026 the corporation was able to settle all arrears owed to foreign energy companies, after they had peaked at around USD 6.1 billion on 30 June 2024, according to statements by Petroleum Minister Karim Badawi. This prompted the companies to inject new investments into exploration and production.
In March 2026, the minister had announced investment pledges exceeding USD 19 billion over the following three years, which the government reaffirmed when it announced full settlement in June. They included USD 8 billion from Italy’s Eni, USD 5 billion from Britain’s BP, USD 4 billion from the US company Apache, and USD 2 billion from Arcius Energy, the joint venture owned 51% by BP and 49% by XRG, the investment arm of the UAE’s ADNOC Group.
The outstanding payments owed to foreign partners are commercial obligations of EGPC arising from purchases of the partner’s share in dollars. They are not sovereign loans, nor are they counted within external debt, which exceeded USD 166 billion by the end of June 2026. However, the IMF considers them one of the largest fiscal risks because they are guaranteed by the state.
In its recent reviews, the Fund warned of the fiscal burden these guarantees place on the state budget, calling, as part of the corporation’s sustainability plan, for a 25% reduction during the 2026/2027 fiscal year through increased production, energy-price adjustments and stronger collection mechanisms.
Egypt’s total stock of sovereign guarantees stood at around 32% of GDP at the end of June 2025. Estimates suggest that total state-guaranteed loans could reach around EGP 6.2 trillion during the current fiscal year, with EGPC accounting for approximately 60%. Government guarantees are expected to rise to EGP 6.9 trillion in the next fiscal year, equivalent to around 28.1% of GDP. This ratio is declining despite the increase in the guarantees’ nominal value, as nominal GDP grows alongside inflation.
The corporation faces an operating deficit and a financing gap because it buys petroleum products or its partners’ shares in US dollars at international prices, while selling them locally in Egyptian pounds at subsidised or lower prices. It also suffers from delayed payments by government entities, particularly the electricity sector. It therefore resorts to credit facilities and short- and medium-term loans to meet operating requirements, pay foreign partners and purchase fuel.
The report on the seventh review of the Extended Fund Facility programme, issued on 13 August 2026, states that the settlement of EGPC’s arrears to foreign oil and gas companies was supported by external loans obtained by the corporation from international institutions with government guarantees, alongside direct budgetary transfers. However, neither the Egyptian government nor the Fund published details of the lenders’ names, interest rates or repayment periods.
In March 2025, the Cabinet had approved a package of reforms for EGPC, including an allocation of EGP 75 billion from the budget to settle arrears, and an equal amount for the Egyptian Electricity Holding Company.
In May 2026, the corporation obtained USD 800 million in financing under the 2026 annual work programme between the Egyptian government and the International Islamic Trade Finance Corporation, a member of the Islamic Development Bank Group, with a total value of USD 1.5 billion.
Last September, Misr Petroleum and El-Taawun Petroleum obtained two loans totalling EGP 24 billion: EGP 14 billion from Suez Canal Bank for the former and EGP 10 billion from Qatar National Bank for the latter. Guaranteed by the Ministry of Finance for a three-year term, the loans cover letters of credit for petroleum-product imports on behalf of EGPC, according to informed sources cited by Al-Shorouk.
EGPC is seeking to borrow around USD 850 million from a consortium comprising Abu Dhabi Commercial Bank, Mashreq and Standard Chartered, for the account of “Bel”, a company the corporation established specifically to obtain this financing. The three-year loan would be secured by EGPC’s export contracts and shipments, according to press reports.
How Did the Corporation’s Debts Accumulate?
Arrears owed to foreign petroleum companies began to emerge in 2004 and 2005, reaching around USD 610 million, as consumption of diesel, fuel oil, cooking gas and petrol exceeded domestic production. This prompted the ministry to purchase foreign partners’ shares and import the remaining quantities to meet market needs.
The crisis worsened after 2011, with arrears rising to around USD 6.3 billion, driven by higher global oil prices and the allocation of financial resources to fuel imports. This affected the availability of supplies: fuel stocks covered no more than two days, while foreign companies refrained from making new investments, and not a single petroleum agreement was signed between 2011 and November 2013.
At the end of 2013, overdue payments to foreign partners stood at USD 6.3 billion. Following successive payments, they fell to around USD 3.5 billion in mid-2015, and to USD 2.9 billion by the end of August that year after around USD 600 million was paid in a single month. They then declined to USD 2.7 billion by the end of October 2015.
The outstanding payments rose again to USD 3.4 billion by the end of June 2016, despite Egypt paying USD 100 million during the 2015/2016 fiscal year, before falling to around USD 2.3 billion by the end of June 2017, USD 1.2 billion in 2018, and approximately USD 900 million by the end of June 2019.
However, the coronavirus pandemic, followed by the Russia–Ukraine war, the outflow of foreign portfolio investments and declining foreign-exchange reserves, caused outstanding payments to accumulate again. They reached USD 6.1 billion on 30 June 2024, according to the Ministry of Petroleum, and USD 6.2 billion in October of the same year, according to the IMF.
With the announcement of the USD 35 billion Ras El-Hekma deal with the UAE in February 2024, the government began accelerating repayments, subsequently supported by allocations under the March 2025 reform package.
By December 2025, arrears had fallen to around USD 2 billion, according to the IMF. In January 2026, Prime Minister Mostafa Madbouly announced that the government had paid around USD 5 billion, aiming to reduce the remaining balance to USD 1.2 billion by June of the same year while committing to regular payment of monthly invoices. By March 2026, the balance had fallen to around USD 1.3 billion, according to the ministry.
The pace of repayment accelerated in recent months: the outstanding balance fell to USD 714 million in April, then to USD 440 million in May, before the announcement of the final payment on 10 June 2026, about three weeks ahead of the target date.
Despite the settlement of arrears owed to foreign partners, the sector’s debt of around EGP 1.6 trillion at the end of June 2026 indicates that debt burdens have not disappeared so much as changed form.
In the same context, the minister stressed the importance of strengthening cooperation and partnerships between Egyptian and foreign companies, and of honouring financial obligations to restore investor confidence and encourage new investment. He called for a stable and attractive investment environment, alongside expanded private-sector participation in oil, gas and mining activities.
Economist Dr Zohdi El-Shami believes that petroleum-sector debt reaching approximately EGP 1.6 trillion represents an enormous level of indebtedness and calls for a comprehensive review of the sector’s condition and the policies that led to the accumulation of these obligations.
He links the debt crisis to what he describes as declining production at some promising fields, including Zohr, alongside years of accumulated debt. In his assessment, this has contributed to the reluctance of some investors and foreign companies to undertake exploration in Egypt.
He considers the crisis to reflect serious errors in monitoring production and supervising existing fields, alongside the accumulation of debt and its impact on investment in the oil sector. He notes that continued state intervention to pay the sector’s arrears through government-guaranteed loans increases the external debt burden, particularly since petroleum-sector payments are denominated in dollars.
He tells Zawia3: “EGPC becoming a debtor on this scale raises questions about why the sector has reached this level of indebtedness, and how earlier expectations that Egypt would become an exporter and an energy hub gave way to dependence on gas and oil imports.”
He warns that these conditions may also affect new petroleum-sector contracts, questioning the merits of some terms that give foreign partners large shares in new discoveries while leaving the Egyptian partner with a limited share.
He calls for a genuine review of petroleum policies, particularly as Egypt has shifted from an energy-exporting country to a net importer of gas and oil, meaning that global price fluctuations have negative economic repercussions.
He explains that Egypt had been a net petroleum exporter since the mid-1970s, following the recovery of the Sinai fields and the entry of foreign investment into the sector, before becoming a net petroleum importer as production declined and some resources were depleted.
He adds: “Egypt later began exporting gas, then announced self-sufficiency after the discovery of the Zohr field. But that situation did not last, as the country came to face a gap between its gas needs and production.”
He continues: “Domestic needs amount to around 6 billion cubic feet per day, compared with production of approximately 4 billion, leaving a gap estimated at around 2 billion cubic feet that is covered by imports.” He notes that higher global energy prices put additional pressure on Egypt.
The economist stresses that continued government-guaranteed borrowing puts pressure on Egypt’s sovereign borrowing costs and credit rating, and burdens public finances. He points out that the problem lies not only in the size of external debt, but also in its servicing costs relative to exports and foreign-currency revenues.
He warns that continued financing pressures could lead to further borrowing constraints, and that, during crises, countries may resort to solutions such as debt-for-asset swaps.
Negative Signals to Investors
EGPC’s acquisition of new loans or credit facilities to pay foreign companies raises important questions, especially after the government announced “zero debt” to foreign investment partners in June 2026.
Dr Hossam Arafat, a professor of petroleum and mining at Cairo University’s Faculty of Engineering and former head of the Petroleum Products Division at the Federation of Chambers of Commerce, explains that debt owed to foreign petroleum companies, which reached around USD 6.2 billion in June 2024, was addressed over two years through payment scheduling and repayments, culminating in the announcement of full settlement in June 2026. He considers this development one of the important factors that strengthened confidence in the petroleum and mining sectors and encouraged increased investment.
He tells Zawia3: “In principle, increased petroleum production and revenues should cover outstanding obligations, rather than borrowing to repay existing debt. Announcing new borrowing after reaching zero debt could send negative signals to investors if there is no clear explanation of the nature of this financing and how it will be used.”
He stresses that declining output from Egyptian fields widened the gap between production and consumption, explaining that output fell from around 4.2 billion cubic feet to approximately 3.8 billion feet per day, forcing Egypt to increase gas imports to meet domestic demand. The latest monitoring data show production stabilising at around 3.6 billion cubic feet per day in August 2026.
He explains that a number of oil and gas discoveries announced by the Ministry of Petroleum in early 2026 were reserves already present in wells that had not entered production at the time. He notes that regular payment of foreign companies’ dues helped restore their activity, leading to announcements of new discoveries and some entering production stages.
He points out that Egypt needs crude oil to operate refineries and supply the market with petroleum products such as petrol, diesel and fuel oil. Exporting petroleum products therefore becomes more difficult when a domestic shortfall requires imports.
He adds: “The decline in domestic production has also affected Egypt’s export capacity. The priority has become meeting domestic market needs, especially with a shortfall requiring imports from abroad, which limits the quantities available for export.”
He stresses that assessing Egypt’s petroleum sector should not rely solely on announcements of discoveries or increased investments. It should also consider the evolution of actual production, the size of the gap between production and consumption, and the sector’s ability to fulfil its obligations without increasing reliance on external financing or government guarantees.
He also links tensions involving the Strait of Hormuz and Bab el-Mandeb, disruptions to maritime transport and supply lines, including routes associated with transporting oil and petroleum products, to negative effects on Egypt’s oil and gas trade, both imports and exports. He notes that Egypt had relied, among other sources, on imports from the Arabian Gulf to supply the crude needed for refining.
In the last week of October, global oil prices rose by more than USD 3 a barrel, with Brent recording its highest close in around six months amid disrupted Middle Eastern energy supplies, while US crude ended the week up 2.3%.
Brent crude futures jumped at settlement to USD 116.72 a barrel, an increase of USD 3.55, or around 3.14%, reaching their highest level since 29 April. US West Texas Intermediate crude also rose to USD 103.27 a barrel, up USD 3.80, or 3.8%.
The petroleum and mining professor attributes this largely to geopolitical factors, explaining that developments in regional conflicts and tensions, alongside political statements concerning the war, quickly affect market expectations and drive crude prices up or down.
Commenting on this rise, Egyptian Prime Minister Mostafa Madbouly stated during the “Egyptian Energy Journey” session at the Egypt Forum 2026 that his government faces three possibilities: either absorb the full increase through the budget or borrowing, adding to public debt and the interest burden borne by future generations, or pass the entire increase in fuel and energy costs on to citizens.
The third possibility, in his view, is to stay within available budget allocations and purchase petroleum products according to available resources. This could mean meeting only around 50% to 60% of citizens’ needs, affecting fuel availability and energy supplies.
Debt Risks and Budget Burdens
Egypt’s public finances face growing pressure from rising debt-servicing costs, the short maturities of a large share of domestic debt, and the expanding scope of sovereign guarantees, which represent contingent liabilities for the public treasury. These factors arise as the government seeks to reduce public debt, improve its fiscal position and lower borrowing costs.
Interest payments absorb more than half of general government revenues. Moody’s estimated them at around 59% of revenues in the 2025/2026 fiscal year, which ended in June 2026, compared with around 63% in the previous year, while Standard & Poor’s estimates put the ratio close to 67%. Despite the decline, the ratio remains high compared with countries with similar credit ratings, limiting the government’s ability to direct more resources to health, education, social protection and investment.
Against this gradual improvement, Moody’s upgraded Egypt’s credit rating in mid-October from Caa1 to B3 with a positive outlook. It projected that, if primary surpluses continue and financing costs decline, the interest bill could fall to around 50% of revenues and debt to below 70% of GDP by the end of the decade.
In the 2026/2027 fiscal-year budget, the government allocated around EGP 2.419 trillion to interest payments out of total expenditure, excluding debt principal repayments, of approximately EGP 5.178 trillion. Meanwhile, the debt of budget-sector entities fell to around 81.8% of GDP by the end of June 2026, compared with a peak of approximately 96% in 2023. The government aims to continue reducing the ratio to around 78% by June 2027.
The challenge is not confined to the size of debt, but also extends to its maturity structure. Domestic debt represents around three-quarters of the debt of budget-sector entities, with significant reliance on short-term Treasury bills with maturities ranging from 91 to 364 days. The average maturity of new domestic issuances did not exceed 1.1 years by the end of June 2026, according to IMF estimates.
The Fund estimates that the government’s gross financing needs peaked at around 42% of GDP in the 2025/2026 fiscal year, among the highest levels globally. This increases refinancing needs and makes the government more vulnerable to changes in interest rates and domestic liquidity.
Added to this is the burden of sovereign guarantees, which do not become direct expenditure when issued but turn into actual obligations for the treasury if the guaranteed entities default. The growth in guarantees and their concentration in the energy sector, particularly EGPC’s guarantees, are among the fiscal risks taken into account by rating agencies. The possibility of these obligations becoming actual debt increases debt-servicing burdens and puts pressure on the deficit, potentially raising sovereign borrowing costs if investors perceive greater risks.
According to World Bank data based on the Central Bank’s debt-service schedules, Egypt faces USD 60.9 billion in external debt maturities between July 2026 and June 2027. The Central Bank bears the largest share at around USD 21.65 billion, including approximately USD 19.1 billion in deposits and currency liabilities, most of which are owed to Gulf states. This compares with USD 16.1 billion owed by commercial banks, USD 12.9 billion by other sectors, and around USD 10.3 billion by the government.
During the second quarter of 2026, the Central Bank of Egypt’s debt rose by around USD 1.1 billion to reach approximately USD 36.85 billion at the end of June. Debts of other non-bank sectors also increased by around USD 2 billion to approximately USD 23.4 billion, bringing total external debt to USD 166.75 billion at the end of June 2026.
It appears that the announcement of “zero debt” did not so much end the petroleum-sector crisis as redistribute it: arrears owed to foreign partners were paid, but the sector continued to rely on loans and government guarantees to finance its needs.
With falling production and a rising import bill, the public treasury remains exposed to the risks of EGPC’s debts, which account for the largest share of sovereign guarantees.
While the government is betting on increased production to attract investment and reduce indebtedness, continued borrowing to finance the operating deficit means that “zero debt” to foreign partners does not necessarily equal “zero risk” to public funds.
