Egypt’s external debt rose to $145.5 billion at the end of December 2021, compared to $129.2 billion at the end of December 2020, with a growth rate of 12.6% in one year. According to the data of the Central Bank of Egypt, the external debt increased by 8.1 billion dollars during the last quarter of 2021 only, which represents an increase of 6.2%. It should be noted that the new increase in foreign debt came before the start of the Russian war on Ukraine, with its effects on Egypt in terms of a decline in foreign exchange flows from several sources, especially tourism and foreign investments in government bills and bonds.
External debt will increase further
Egypt’s foreign debt increased during the first four months of this year by no less than $6.2 billion, as it obtained a deposit of $5 billion from the Kingdom of Saudi Arabia, in addition to two loans from the Asian Infrastructure Investment Bank and the International Bank for Reconstruction and Development worth 720 million The government also sold $500 million of bonds in Japanese markets. And it will not stop there, as the government is negotiating with the International Monetary Fund to obtain a new loan amid expectations that it will amount to 3 billion dollars. Reports indicate the intention of other Gulf countries to provide deposits to the Central Bank of Egypt, as Saudi Arabia did.
Standard & Poor’s expected that Egypt would become the largest issuer of sovereign debt among emerging markets in Europe, the Middle East and Africa, with issuances amounting to $73 billion during the current year 2022, exceeding what it borrowed last year through bonds by about $ 10 billion. A large part of this debt will be from abroad. The problem is that these loans are not aimed at establishing productive projects that will extricate the country from the vicious circle of debt in which it revolves, but rather their goal is to pay off previous debts. According to “Standard & Poor’s”, Egypt will lead 54 countries in Europe, the Middle East and Africa in extending the loans it obtains through bonds. It is issued to pay the value of old bonds, as this rate in Egypt is about 33.5% of the gross domestic product, a significant difference from the region’s countries.
Massive jump in debt under Sisi
The foreign debt witnessed a massive jump under President Sisi, as it rose from $46 billion in June 2014 to 145.5 billion dollars at the end of 2021, an increase of 316%! The external debt ratio to GDP for the fiscal year 2020/2021 is about 41%, compared to 15% in 2010. Egypt’s external debt is much more outstanding than the announced figure (145.5 billion dollars). The government refuses to consider treasury bills owned by foreigners who are not residents among foreign loans.
Treasury bills owned by non-residents are short-term loans in Egyptian pounds, due within less than a year. But those non-resident speculators, when they recover the value of their money and the interests they earned, exchange those funds for dollars to transfer them abroad, so they are considered disguised foreign loans, but the government refuses to recognize this. The value of treasury bills owned by foreigners until last February (the latest data of the Central Bank) amounted to $17.1 billion, which means that the real external debt exceeds 162.5 billion dollars, including 116 billion dollars in the era of Sisi only, which will constitute a severe burden for the simple citizen at the end.