Egypt Watch

Egypt is among the countries most vulnerable to default on its debts

Egypt tops the list of the three emerging economies most likely to default on sovereign foreign debt over the next year.

This comes against the backdrop of its financial resources being pressured by the corona pandemic, according to the Financial Times, quoting Adam Wolf, an economist at the Absolute Strategy Research Centre. According to the Oxford Economics and the International Monetary Fund, among the 20 emerging economies that have the largest financing requirements in 2020, Egypt comes first with its outstanding debt and fiscal deficit rate reaching 40 per cent of its GDP.

Expectations also indicate that Egypt will have to choose between reducing government spending in the next few years and requesting restructuring of its debts, after the deficit in its budgets widened sharply against the backdrop of the large increase in public spending, since the outbreak of coronavirus.

The Egyptian regime obtained, during the recent period, several loans, including two loans from the International Monetary Fund, one of them valued at $5.2 billion, and the other $2.8 million.

The Egyptian Ministry of Finance announced at the end of last May that Egypt would obtain a new loan worth $5 billion by offering international bonds, with a maturity of 30 years. According to a statement by the Egyptian Ministry of Finance, this is the largest international issuance of international bonds that Egypt has undertaken in its history, and the largest value of international bond offering by an African country.

Egypt has suffered from a doubling of the internal and external public debt since the current regime in Egypt came to power, after a military coup in July 2013. According to the data of the Central Bank of Egypt, the country’s external public debt increased, on an annual basis, to $106.221 billion at the end of March, compared to about $43 billion in June 2013. The country’s domestic debt increased year on year to EGP 4.204 trillion ($256.2 billion dollars) at the end of March, compared to EGP 1.5 trillion ($94 billion) in June 2013.