The full settlement of arrears owed to international oil companies, together with higher domestic fuel prices, is expected to support Egypt’s oil and gas production, improve the Egyptian General Petroleum Corporation (EGPC )’s operating profitability and ease its financial pressures, according to the  International Monetary Fund  (IMF) report on the results of its seventh review of Egypt’s economic reforms.

The report directly linked payments to international oil companies with renewed activity in the upstream sector. It noted that, according to Egyptian authorities, clearing the arrears has strengthened incentives for international oil companies to restore production and step up exploration, ultimately boosting domestic output.

This connection is particularly significant for Egypt’s energy landscape as it indicates that resolving the debt was never merely a financial measure, but rather a strategic mechanism designed to rebuild trust and compel investors to resume-and accelerate-investment, drilling, and field development,  said the report.

Egypt has cleared $6.2 billion in arrears owed by the EGPC  to international oil companies (IOCs) in June 2026 through government-guaranteed loans from international institutions, as stated by the report. The government is now working to prevent new arrears from accumulating.

“The arrears accumulation had curtailed investment, slowed drilling and exploration, and stalled field development — ultimately weighing on domestic oil and gas output,” Karim Badawi, Minister of Petroleum and Mineral Resources, previously lamented.

Despite the settlement, the IMF cautioned that EGPC’s financial position remains weak and that the corporation is still highly leveraged.

EGPC’s financial problems stem from a structural mismatch between its revenues and its obligations. It buys fuel from IOCs or from abroad at dollar-denominated global market rates while selling it locally to government entities -mainly the Ministry of Electricity and Renewable Energy- in  Egyptian Pounds at heavily subsidized rates. What exacerbates the problem is that mostly these entities fail to pay EGPC on time or in full. The corporation resorts to borrowing to bridge the revenue gap, burdening itself with huge debt service payments.

The government, noted the report, is required to submit a progress report on EGPC’s viability plan to the Ministry of Finance by end-September 2026. The report will assess progress toward restoring a cash-flow surplus, reducing government guarantees and improving collections, while providing a comprehensive update on EGPC’s financial position.

The authorities’ target is to achieve a positive cash-flow balance for EGPC by FY2025/26, while strengthening profitability and preventing the re-accumulation of arrears.