Egypt has announced that it has repaid over the past four months its short-term debt of $20 billion and replaced it with long-term debt. An official banking source said the long-term loan portfolio, some of which extends for 40 years, means that the long-term debt ratio reaches nearly 90 per cent of the volume of debts owed to Egypt, according to the Middle East News Agency. He added that foreign debts on Egypt constitute less than 33 per cent of the volume of GDP.

The source tried to justify the new debts by saying that “this percentage is very low according to international standards that divide the foreign debt slides between the countries into three segments and put Egypt in the lowest segment of it, given the low ratio of external debt to the gross domestic product.” He added, “According to the data of the Central Bank of Egypt, Egypt’s external debts amount to $112.6 billion at the end of last December, of which $101.3 billion is long-term debt,” according to his claim. He pointed out that “Egypt’s external debt is reassuring and within safe borders internationally, compared to other countries in emerging markets whose foreign debt is more than twice the size of Egypt’s external debt.” He pointed out that “Egypt has agreed on loans worth $13 billion from the International Monetary Fund and the international market, which are long-term loans from which I have so far obtained $7.77 billion.”

The debt is distributed between $2.77 billion from the IMF under the Rapid Financing Tool Agreement and $5 billion of bonds offered by Egypt last month to pay $20 billion in the past four months and only $5 billion that will be paid by June 2021. The source stated that “the size of the Egyptian economy has doubled since 2011 from EGP 800 billion ($50 billion) to more than EGP 6 trillion.” He added that “the economic reform programme has succeeded in increasing the state’s resources in various economic sectors, whether tourism, industry, export or other, and in light of the repercussions of the coronavirus crisis, it is necessary to maintain foreign cash flows in order to preserve the gains of economic reform.”

Since taking office, General Abdel Fattah al-Sisi has expanded borrowing from home and abroad to implement giant projects. However, experts are skeptical of its economic viability. From time to time, Egypt takes loans from international institutions and Gulf countries, and it also requests postponing the repayment of loans due to it in exchange for higher interest.

Egypt’s external debt exceeded the barrier of $120 billion, in a historical precedent that has not occurred before, amid expectations that the number would be greater. Financial experts say that long-term debt resolves an urgent problem, by paying off the debt that is due, but they warn that these debts place a heavy burden on the Egyptian economy. Opponents accuse the Egyptian regime of solving its urgent economic problem, but sinking the Egyptian economy with increasing debt for the future.