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  Egypt nears return to economic stability

  9 February 2026

  

   

  After a torrid few years characterised by seismic exogenous challenges – from the collapse in traffic through the Suez Canal through to spiralling inflation – the mood in Cairo heading into 2026 is notably more relaxed over its economic prospects.

  Policymakers have reason to be satisfied with the turn of events. Inflation in late 2025 slipped to its lowest level in four years, at 12.3%, amid falling food prices. More good news is likely this year, as the Central Bank of Egypt (CBE) anticipates inflation halving to just 7% in late 2026.

  One straw in the wind, indicative of a more confident economic disposition, came with the settling of long-standing arrears owed to international oil companies active in Egypt. A receivables bill that once stood at $6bn has been reduced to just over $1bn as the government moves to incentivise investment in its upstream oil and gas sector.

  GDP growth is on course to reach around 5% this year, and tourism numbers are surging – bringing with them much-needed hard currency. Meanwhile, non-oil exports increased 17% to almost $49bn in 2025, supporting a slimming of the trade deficit by 9 percentage points to $34.4bn.

  Analysts see stronger growth dynamics in play this year.

  “Even the Central Bank is saying we are very close to full throttle for the economy. Inflation is cooling, and we expect it to reach single digits by Q4 of this year. That should give the CBE scope for another 500 basis points of monetary easing for this year,” says Pieter du Preez, senior economist at Oxford Economics.

  The current deposit rate stands at 20%, leaving plenty more room for growth-supportive interest rate cuts to come.

  By 2027, says Du Preez, Egypt should be witnessing the return of monetary policy stability.

  “Fiscal stability is the big question,” he says. “The latest figures show the fiscal deficit is a bit narrower, but the biggest drag on the fiscal side is still interest payments, which are about 50% of expenditures and 75% of revenues. Most countries seeing that would go into default immediately.”

  Dodging default

  There are solid reasons why Egypt has not gone into default mode. The IMF noted an impressive 35% increase in tax revenues in the July-November 2025 period, through reforms to widen the tax base, improve voluntary tax compliance, and streamline exemptions. Ratings agency Moody’s noted that this was the result of IMF-backed reforms stimulating tax collection. The net result was a record fiscal surplus of 3.3% of GDP in the financial year ending June 2025.

  Debt reduction targets are also being met, with a debt-to-GDP ratio of 80% anticipated by June 2026 – a reduction from 96% two years prior.

  Cairo has been further helped by some lucrative land sales in recent years, including Abu Dhabi’s landmark $35bn Ras El-Hekma real estate project, and the Qatar-backed Alam Al-Roum real estate project, which could involve investments of up to $29.7bn.

  The reaching in late December 2025 of a staff-level agreement with the IMF on the fifth and sixth reviews under the Extended Fund Facility arrangement, part of an $8bn loan agreement, came as another confidence booster.

  That still leaves some major challenges that need to be overcome if Cairo is to attract investment beyond big-ticket Gulf projects.

  “The questions start flagging for 2027, post the IMF deal. We’ve seen this before. After the IMF programme ends, they revert back to old ways, managing the exchange rate and borrowing,” says Du Preez.

  Some support will come from a stronger pound and weaker dollar, and a subsiding in the regional conflict that led to Egypt losing some $20bn through disruption to Suez Canal traffic. Tourism income is set to reach $17.8bn this year. 

  A recharging of the flagging Egyptian privatisation programme, something the IMF in particular is keen to see progress on, would add substance to the government’s efforts.

  “There will probably be a pickup again in privatisation this year, given that it will be given much more emphasis in the up-and-coming reviews. And we’ll probably see a few more subsidy cuts,” says Du Preez.

  Banking bonus

  The more supportive macro picture should have positive impacts on Egypt’s banking sector. Ratings agency S&P released in early February a banking outlook that envisaged increased private sector investment, along with sustained momentum within the tourism sector, and a loosening monetary policy. These would provide tailwinds to lending expansion, which it sees reaching about 25% in 2026.

  Bank lending has increased by 30% annually since March 2025, though that reflects inflationary impacts and currency fluctuations.

  The ratings agency warned that the strong lending growth will not be sufficient to compensate for the impact of declining interest rates on profitability. S&P warned the sector’s return on equity will decline to about 20% in 2026 – from a peak of 39% in 2024, attributable to the adverse impacts of lower interest on banks’ income statements.

  Despite the strong credit growth, analysts warn it is also fuelling the “crowding out” effect that has seen state-linked companies absorb too high a proportion of bank loans, leaving less credit to spare for private businesses. 

  That situation may be changing. “There’s less need for banks to buy government debt directly. And with the overall debt burden falling as a share of GDP, there’s less need to actually buy debt in general, and that should free up more resources as well,” says James Swanston, Mena economist at consultancy Capital Economics.

  The upside for Egyptian banks is that their higher exposure to the government is better for their overall risk dynamic than exposure to equivalent private sector borrowers.

  “Certainly capital buffer-wise, banks are in a better place than they have been in recent years. Non-performing loans (NPLs) have come down,” says Swanston, although changes in the definition of what constitutes an NPL might change this.

  “At the same time, there is an economy that is improving, so even if the NPL ratio does rise, it’s not going to spell disaster for the Egyptian banking sector,” says Swanston.

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  James Gavin
• 
  WEBINAR: GCC Data Centres Market 2026

  9 February 2026

  Webinar: GCC Data Centres Market 2026
  Tuesday 24 February | 11:00 GST  |  Register now

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  Agenda:

  • Overview: Economic diversification, industrialisation, localisation and AI agendas
  • Data and AI strategies, regulations and framework
  • Data centre projects overview, pipeline and investments by country
  • Key trends and analysis: current and future capacity, construction cost per MW
  • GCC data centre top unawarded projects
  • GCC top clients, contractors, personalities
  • Data centre energy requirements, technologies and carbon footprint mitigation
  • Summary
  • Q&A session

  Hosted by: Edward James, head of content and analysis at MEED

  A well-known and respected thought leader in Mena affairs, Edward James has been with MEED for more than 19 years, working as a researcher, consultant and content director. Today he heads up all content and research produced by the MEED group. His specific areas of expertise are construction, hydrocarbons, power and water, and the petrochemicals market. He is considered one of the world’s foremost experts on the Mena projects market. He is a regular guest commentator on Middle East issues for news channels such as the BBC, CNN and ABC News and is a regular speaker at events in the region. 

  Click here to register

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  MEED Editorial
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  Coastal destinations are a boon to Egyptian construction

  9 February 2026

  

   

  Egypt’s construction industry is poised for significant growth on the back of two large-scale schemes worth a combined $50bn that were announced last year.

  The key projects set to drive future growth are the $29.7bn North Coast development by Qatari Diar, the real estate arm of Qatar’s sovereign wealth fund, and the $19bn Red Sea Marassi project on Egypt’s Hurghada coast, being developed by Emaar Misr and City Stars.

  These large-scale, multi-phased schemes are expected to provide further impetus to a market that in 2024 also saw the launch of the $24bn Ras El-Hekma project, a 170-million-square-metre (sq m) development announced by Abu Dhabi-based holding company ADQ.

  Market performance

  The projects are a much-needed boon in an otherwise declining market. In 2025, contract awards in Egypt’s construction and infrastructure sectors fell by 35% year-on-year, with total awards amounting to just $10bn.

  The decline marked a deepening slowdown following a boom in 2022, when construction and transport contract awards reached a record $23bn, before sliding to $15.6bn in 2023, according to MEED Projects.

  The prolonged contraction in project activity has reshaped contractor behaviour. Faced with a thinning domestic pipeline, Egyptian firms have increasingly looked beyond their home market, with Saudi Arabia emerging as the clear beneficiary.

  Since the start of 2022, Egyptian contractors have secured more than $40bn in work in Saudi Arabia, underscoring their growing role in the kingdom’s expansive projects market. Leading players include Orascom Construction, Petrojet, Enppi, Elsewedy and Hassan Allam Construction.

  Future prospects

  With a pipeline of more than $110bn-worth of construction and infrastructure projects, Egypt offers potential that could entice contractors to return in the medium to long term.

  The most advanced of these schemes is the Ras El-Hekma project. The development involves constructing a new state-of-the-art city on the Ras El-Hekma peninsula, west of Alexandria, between Marsa Matrouh and the city of New Alamein.

  The project’s scope includes residential districts, hotels, resorts, entertainment venues and service facilities such as hospitals, schools and universities. Plans also feature administrative buildings, an economic free zone for the information technology sector, logistics hubs, a business district and a marina.

  Activity has stepped up recently. In January, Modon tendered several contracts for the first phase of development at Ras El-Hekma. These cover construction work across five packages that are expected to cost several billion Egyptian pounds.

  Modon Holding also awarded a $316m contract in January for one of the packages to the local firm Orascom Construction.

  With an initial investment of $24bn, the Ras El-Hekma project represents a significant financial infusion into Egypt’s struggling economy. The development is expected to provide an immediate stimulus to the construction industry and related sectors, with Egyptian contractors and real estate developers set to play key roles in the project’s development and operation.

  The other large-scale scheme expected to make progress is the Red Sea Marassi project. Design work for the project’s initial phase is complete, and tendering for the main construction works is expected to begin shortly.

  The development spans more than 10 square kilometres (sq km) and is located near Hurghada International airport. It features a 1.5-kilometre beachfront, 400 metres of sea docks, 12 hotels and more than 500 retail facilities.

  The Qatar-backed North Coast development, meanwhile, is expected to enter the market in the near future. The development, featuring residential assets, hotels, schools, universities and leisure facilities, will span an area of about 20 sq km in the Alamein Al-Roum area.

  Transport pipeline

  The most immediate transport infrastructure project anticipated to move ahead is the addition of a fourth terminal at Cairo International airport. Egypt completed the project’s financial and technical studies last year. Upon completion, the new terminal is expected to increase the airport’s capacity to 60 million passengers a year.

  Beyond aviation, the transport pipeline is dominated by plans to expand Egypt’s railway and urban transit networks. According to the National Authority for Tunnels (NAT), eight major schemes covering metro, high-speed rail and light rail transit (LRT) are currently at the study stage.

  The first of these is the extension of Cairo Metro Line 1 from El-Marg North to Shubra El-Kheima. The scheme will span about 19km and include 14 stations.

  Another major proposal is Cairo Metro Line 6, a 34km-long line running parallel to Line 1. The route will run north-south through Greater Cairo, linking Shubra El-Kheima and New Maadi, and terminating at the start of Ain El-Sokhna Road at Al-Khosos.

  Plans are also in place for Line 4 of the high-speed rail network, which will extend from Port Said to Abu Qir in Alexandria. In parallel, NAT is studying further phases of Cairo Metro Line 4.

  Additional projects under consideration include phase five of the LRT system linking Cairo with the New Administrative Capital and 10 Ramadan City, and phase five of Cairo Metro Line 3.

  The pipeline also includes the rehabilitation and maintenance of Cairo Metro Line 2, as well as a proposed line extending from the end of the second phase of Cairo Metro Line 4 at Al-Rehab to Cairo International airport.

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  Yasir Iqbal
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  Firms submit $1bn phosphate rail track doubling package

  9 February 2026

  

   

  Contractors have submitted bids to Saudi Arabian Railways (SAR) for a SR4bn-plus (approximately $1bn) contract to add another track to the existing phosphate transport railway network in the kingdom’s Eastern Province.

  According to sources, contractors submitted their bids on 1 February.

  SAR issued the tender notice in late November and set an initial bid submission deadline of 20 January, as MEED previously reported.

  The existing railway line runs from the Waad Al-Shamal mines to Ras Al-Khair. The new project will span about 100 kilometres, connecting the AZ1/Nariyah Yard to Ras Al-Khair.

  The scope includes track doubling, alignment modifications, new utility bridges, culvert widening and hydrological structures, as well as the conversion of the AZ1 siding into a mainline track.

  The scope also covers support for signalling and telecommunication systems.

  Switzerland-based engineering firm ARX is the project consultant.

  MEED understands that this is the first of four packages that SAR is expected to tender imminently for the phosphate railway line.

  The other packages expected to be tendered shortly include the second section of track doubling, the depot and the systems package.

  In 2023, MEED reported that SAR was planning two projects to increase its freight capacity, including an estimated SR4.2bn ($1.1bn) project to install a second track along the North Train Freight Line and construct three new freight yards.

  Formerly known as the North-South Railway, the North Train is a 1,550km-long freight line running from the phosphate and bauxite mines in the far north of the kingdom to the Al-Baithah junction. There, it diverges into a line southward to Riyadh and a second line running east to downstream fertiliser production and alumina refining facilities at Ras Al-Khair on the Gulf coast.

  Adding a second track and the freight yards will considerably increase cargo-carrying capacity on the network and facilitate growth in industrial production. Project implementation is expected to take four years.

  State-owned SAR is also considering increasing the localisation of railway-focused materials and equipment, including the construction of a cement sleeper manufacturing facility.

  

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  Yasir Iqbal
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  Aldar and Dubai Holding announce new Dubai projects

  9 February 2026

  Abu Dhabi-based developer Aldar Properties and Dubai Holding have signed another joint-venture agreement to expand their partnership in Dubai by adding two new projects to their portfolio.

  The new developments will deliver 14,000 new residential units.

  The first project will be located in the Nad Al-Sheba area. It will span an area of about 4 million square metres (sq m) and comprises apartments, townhouses and villas. The project will be launched this year.

  The other project will be developed on Palm Jebel Ali. It will be a waterfront development featuring branded and non-branded residences.

  The project will cover about 250,000 sq m and will be launched next year.

  In a statement, Aldar said: “The partnership, which was announced in 2023, marks a significant milestone in Aldar’s continued growth in Dubai, following the successful launches of its first communities in the emirate, including Haven, Athlon and The Wilds.”

  Dubai Holding is a diversified global investment company with a portfolio of AED130bn ($35bn)-worth of assets, while Aldar is Abu Dhabi’s largest listed developer.

  The joint venture is currently developing three new communities across an area of 38.2 million square feet (3.55 million sq m) in Dubai.

  The new communities are located in the city’s suburban heart, along the E311 and E611 corridors, on some of the last remaining vacant, undeveloped plots in this popular area.

  Aldar will be responsible for the full development cycle, including concept design, sales, delivery and management of the developments.

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  READ THE FEBRUARY 2026 MEED BUSINESS REVIEW – click here to view PDF

  Spending on oil and gas production surges; Doha’s efforts support extraordinary growth in 2026; Water sector regains momentum in 2025.

  Distributed to senior decision-makers in the region and around the world, the February 2026 edition of MEED Business Review includes:

  > AGENDA: Mena upstream spending set to soar > AGENDA: Global upstream spending to grow  > INDUSTRY REPORT: MEED's GCC water developer ranking > INDUSTRY REPORT: Pipeline boom lifts Mena water awards > MARKET FOCUS: Qatar’s strategy falls into place > CURRENT AFFAIRS: Iran protests elevate regional uncertainty > CONTRACT AWARDS: Contract awards decline in 2025 > LEADERSHIP: Tomorrow’s communities must heal us, not just house us > INTERVIEW: AtkinsRealis on building faster > PORTS: DP World underpins Dubai’s economic growth strategy > INTERVIEW: Parsons says projects market will show resilience  > LEADERSHIP: Energy security starts with rethinking waste > LEADERSHIP: Why 2026 is a breakthrough year for Middle East construction

  To see previous issues of MEED Business Review, please click here

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  Yasir Iqbal