Egypt to launch first tax sukuk to manage rising debt costs

The Egyptian government is preparing to launch its first-ever tax sukuk (Islamic bonds) during the current fiscal year to diversify financing and manage rising debt costs. Under this new mechanism, the Central Bank of Egypt will issue the sukuk on behalf of the Ministry of Finance. The instruments will offer tax-exempt returns, and investors can use both the principal and the accrued interest to settle their future tax obligations.

This move comes as Egypt faces significant pressure from debt servicing costs, which reached approximately 2.12 trillion Egyptian pounds during the first 11 months of the 2025-2026 fiscal year, representing a 20% annual increase. Interest payments accounted for roughly 71% of total public revenues during that period.

In conjunction with these financial tools, President Abdel Fattah el-Sisi has directed the launch of a third package of tax facilities. Egyptian lawmakers have emphasized that these tax reforms should focus on expanding the economic base, integrating the informal economy, and fostering investment and job creation rather than simply increasing revenue collection.