The Central Bank of Egypt (CBE) has reported a significant decline in Egypt’s external debt, which decreased by approximately $11.8 billion during FY 2023/2024. By June 2024, the country’s external debt stood at $152.9 billion, down from $168 billion in June 2023, marking the lowest level in two years.
This reduction is attributed to several factors, including the conversion of $11 billion in deposits due to the United Arab Emirates for investments in the development of the Ras El Hekma project. Additionally, the depreciation of most foreign currencies in which Egypt’s debts are denominated against the US dollar contributed to a reduction of about $1.1 billion. The report also notes a slight increase of around $300 million in the usage of external debt.
Regarding debt servicing, the CBE’s report highlighted that Egypt’s external debt obligations amounted to $32.9 billion by the end of June 2024. This included $23.6 billion in principal repayments and $9.3 billion in interest payments. The report further noted that the external debt stock represented 38.8% of Egypt’s Gross Domestic Product (GDP) at the close of the fiscal year.
Context and Strategic Economic Efforts
This development underscores Egypt’s continued efforts to manage its external debt amid ongoing global economic challenges. The drop in external debt levels reflects a positive sign of the country’s fiscal health, especially considering the economic pressures Egypt has faced in recent years, such as inflation, currency depreciation, and global economic volatility.
The CBE’s focus on managing external debt reflects the government’s broader strategy of fiscal consolidation and economic reform. Furthermore, the strategic partnership with the UAE and investments in key developmental projects, such as the Ras El Hekma project, have played a crucial role in stabilizing Egypt’s foreign exchange reserves and ensuring that critical infrastructure projects continue to move forward despite external economic pressures.
Debt Servicing and Economic Growth
Egypt’s debt servicing responsibilities remain substantial, but the country has made considerable progress in meeting these obligations. The significant payment of principal and interest during the fiscal year highlights the country’s commitment to maintaining its financial obligations while ensuring economic stability. With external debt standing at 38.8% of GDP, the government has managed to keep debt levels at a manageable level.
