The second half (2H) of FY2020/2021 (January-June 2021) witnessed a considerable increase in Egypt’s external debt compared to 1H of the same fiscal year, as external debt inched up to $137.8 billion, up from the $129.1 billion reached by the end of the 1H.
However, Egypt’s total long-term debt increased by the end of 1Q of the current FY2021/22 to reach $125.9 billion, up from the $124.1 billion recorded by the end of FY2020/21, according to the CBE.
On the other hand, Egypt’s total short-term debt declined by the end of 1Q of FY2021/22to $11.4 billion, down from the $13.7 billion recorded by the end of FY2020/21.
General government debt also increased by the end of 1Q of FY2021/22 to reach $82.6 billion, up from the previous FY’s $80.4 billion, the data showed.
By the end of 2021, Egypt’s government gross debt jumped to 91.4 percent of its GDP, up from the 89.8 percent recorded in 2020, according to the International Monetary Fund (IMF).
Nevertheless, the IMF projected this ratio to decline to 89.5 percent in 2022, then to 78.2 percent in 2025, and then 74.1 percent in 2026.
Egypt’s government is aiming to decrease the public debt to GDP ratio to 84 percent in FY 2022/2023 and 79 percent in FY 2023/2024 by adopting a medium-term debt management strategy.
The strategy hinges on reducing debt services, prolonging their terms, and improving governmental security in markets to expand the investor base that will in turn provide the required liquidity to support the budget.
According to this strategy, the external debt trajectory will be set in accordance with the expected cash inflows to the country to a maximum of 37 percent of GDP, which will be put on a downturn path per year.
It also targets decreasing the external debt to GDP ratio to below 30 percent over the medium term.
Additionally, the strategy aims to decrease the public debt to GDP ratio to about 70 percent over the coming four years and putting a cap on loans obtained through external bodies over the same period.
Moreover, the strategy includes settling a portion of debts by exchanging them with unique state-owned assets. The aim is to reduce public debt by EGP 100 billion annually for the coming four years.