Report: What is Egyptian government's plan to absorb economic shocks of war with Iran?

CAIRO - 14 March 2026: The Egyptian government faces escalating economic challenges due to regional tensions, particularly the war in Iran and its direct and indirect impacts on global markets, energy prices, and commodity prices. 

Therefore, it has developed a comprehensive plan to bolster financial stability and ensure the sustainability of public revenues while minimizing the burden on the budget. 

This plan aims to guarantee the continued growth of the national economy and support citizens in the face of any potential economic shocks.

The plan focuses on increasing tax revenues by expanding the tax base and targeting the addition of 100,000 genuine and sustainable taxpayers. 

This will contribute to enhancing voluntary compliance among taxpayers and integrating them into the formal economy. The government also aims to increase non-sovereign tax revenues and link them to the performance of promising economic sectors such as entrepreneurship and productive sectors. This will allow for greater flexibility in addressing any economic fluctuations resulting from regional conflicts.

In this context, the government relies on simplifying the tax system for individuals and companies, linking any tax benefits to achieving tangible economic and developmental results.

Using Ai in Tax policies

The use of modern technologies and artificial intelligence is at the forefront of these policies, through: 

enhancing tax compliancereducing avoidance and evasionestablishing a comprehensive, automated system that improves and simplifies tax services, thereby increasing the efficiency of revenue collection.

As part of its efforts to strengthen trust between the state and the taxpaying community, the Ministry of Finance announced in December 2025 the launch of the second package of tax incentives, which was opened for public discussion in January 2026. 

This package targets various segments of the taxpaying community through four sub-packages designed to encourage voluntary compliance and stimulate the productive economy. It also aims to boost tax revenues using artificial intelligence and achieve tax fairness and transparency in dealings with taxpayers.

Directing finances to human development sectors

On the expenditure side, the government has developed a precise strategy to ensure that financial resources are directed to sectors with a direct impact on human development and economic growth, taking into account the pressures resulting from regional crises. 

This policy focuses on increasing spending on health and education, improving the quality of public services, and creating genuine job opportunities that boost citizens' incomes.

The government is also working to enhance the efficiency of social protection programs, including cash assistance, to support families most affected by crises.

The government's plan includes supporting productive activity and stimulating the national economy by allocating approximately EGP 78.1 billion during the 2025/2026 fiscal year to the productive, industrial, and tourism sectors, as well as small and medium-sized enterprises (SMEs). 

Direct, sustainable economic impact

The plan includes continuing the export subsidy program to alleviate burdens on the industrial sector and stimulate exports, supporting the tourism sector to accelerate investment expansion and improve the quality of hotel services, and supporting the electric vehicle and natural gas vehicle industries to localize technology and enhance environmental sustainability. 

The government also seeks to empower youth economically by providing modern transportation options with accessible financing terms, thereby boosting self-employment opportunities and expanding employment across all governorates.

At the same time, the government aims to strengthen its partnership with the business community by building a relationship based on trust and transparency, encouraging investment, and incentivizing voluntary tax compliance through financial and tax incentives. This approach is based on creating a positive public perception of the state's relationship with taxpayers, ensuring revenue sustainability, expanding the productive base, and stimulating the growth of vital economic sectors, even amidst regional challenges.

The government also aims to fully implement the program and performance budget starting from the fiscal year 2027/2028, to ensure increased spending efficiency and to direct resources to activities and projects with a direct economic and social impact, thereby ensuring sustainable development, financial resilience in the face of external shocks, and reducing the potential impacts of regional wars such as the Iranian crisis on the Egyptian economy.