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Egypt: expectation of ‘terrifying’ debt within 5 years

August 15, 2023 at 11:12 am

Egyptian Pound notes and coins on October 12, 2016 in Cairo, Egypt. David Degner/Getty Images]

Data from an international statistics website shows a “terrifying” expectation of the size of Egypt’s national debt over the next five years. Statista has predicted that the debt will be $510.32 billion in 2028, compared with $132.86bn in 2018, an increase of more than 284 per cent over the ten-year period. The total general government debt, it added, consists of all obligations that require repayment, interest payments or principal repayments by the debtor to the creditor at a date or dates in the future.

The Egyptian government expects the debt rate to reach 95.6 per cent of the GDP by the end of the 2022-2023 fiscal year, due to fluctuations in the exchange rate and the collapse of the value of the Egyptian pound against the dollar.

“The decline in the value of the pound against the dollar led to an increase in the value of government debt by EGP 1.3 trillion, or 13.1 per cent of GDP,” said the Ministry of Finance last Thursday. The steady rise in public debt (internal and external) in Egypt is a major concern for the regime and puts negative pressure on the performance indicators of the economy, which suffers from the accumulation of debt and the difficulty of borrowing at the same time, amid indications of the continuation of the crisis.

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Economists described to Arabi21 the expectations of the Statista website for the size of the Egyptian national debt during the next five years as “terrifying”. They stressed that these are astronomical figures that the Egyptian government may be unable to pay.

“The stark rise in public debt reflects the government’s failure to achieve budget targets, manage the public debt strategy, and its failure to manage the state’s fiscal policy and achieve its goals,” said economist Ibrahim Nawar. “The government’s public spending has spiralled out of control, and the government will face a more difficult test in the current fiscal year.”

Egypt has embarked on massive costly projects since 2015 that do not generate similarly substantial financial returns. These projects include the construction of the new administrative capital east of Cairo at a cost of $58 billion; a nuclear power plant on the Mediterranean coast costing $25bn; the establishment of a high-speed rail network 2,000 kilometres long at a cost of $23bn; and the import of weapons worth billions of dollars that made Egypt the third largest importer of weapons in the world. These figures have been reported by Reuters, and confirmed by data from the Stockholm International Peace Research Institute.

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