The Egyptian Initiative for Personal Rights said, on Tuesday, that foreign loaning rates rose in Egypt in parallel with the International Monetary Fund deal, leading Egypt’s governmental debt to double in the period 2017-2020.

EIPR added in its report, “The foreign debt 2020: Coronavirus raises loaning,” that the governmental debt increased fourfold from 2010, recording 35 per cent of the GDP in 2020 compared to 15 per cent in 2010. Accordingly, the Egyptian per capita share in debt doubled from $400 in 2000 to $900 in 2020.

The report pointed out that treasury bills were the main tool used by the Egyptian government to loan, which is EGP loans that have to be paid in USD within a year. The total value of treasury bills issued by Egypt recorded $26 billion in January 2021. These bills are not inserted under the total figure of the foreign debt of Egypt, although they burden the public financials as they have to be paid back in USD.

Between March 2020 and May 2020, foreigner investors got rid of their bills due to fears after the COVID-19 crisis, which drew $18 billion out of the country. However, the high interest rates offered by the Egyptian government, which is one of the highest in the world, lured investors back despite the low credit rating Egypt assumes as a high-risk country. This distorted situation raised the debt pay off and dues allocations to 50 per cent of the foreign currency reserve in the Central Bank of Egypt in September 2020. Accordingly, the real period of necessary importing covered by the reserve was four months rather than eight months, which is the period announced by the CBE in December 2020.

EIPR explained that Egypt had to pay off $28.6 billion, which exceeds the total Egyptian exports and equals five times the Suez Canal revenues, for debts and bills dues. This value equals threefold the education budget and fivefold the health budget. The report made seven recommendations including increased transparency and oversight over foreign debt spending, putting foreign loaning under parliamentary oversight, restructuring foreign debt and putting a maximum limit on it, and putting in place a five-year plan for national projects, which are financed by foreign debts. Such plans are to be discussed and approved by the parliament.