The Egyptian parliament discusses new sovereign loan agreements amid fears of spiking foreign debt

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Egypt’s House of Representatives referred three international loan agreements to the relevant specific committees for discussion.

The first is the agreement signed by President Abdel Fattah El-Sisi regarding a loan from the Korean Economic Development Cooperation Fund, amounting to USD 251 million, for the modernization of national railways. The second agreement is related to the president’s decision to approve a loan from the European Investment Bank, amounting to EUR 78 million, to contribute to financing a wastewater treatment project in Helwan. The third and last of these agreements is the president’s decision regarding the approval of a loan from the European Investment Bank, amounting to USD 221 million, to contribute to financing the modernization project of the Tanta-Mansoura-Damietta railway.

Several Egyptian MPs have objected to the government’s tendency to rely on loans at approximately 50% of its resources in the draft budget for the new fiscal year, stressing that the government is only good at borrowing. During Monday’s session, the House of Representatives agreed to add six billion pounds as an additional appropriation to the current fiscal year’s budget to pay off debt interests, accompanied by objections from some representatives.

Member of the Plan and Budget Committee, Mohamed Badrawi, said that the new draft budget does not show any change in the government’s policy that relies mainly on debt, adding that the budget deficit is more than 500 billion pounds, in addition to the interests of debts that exceed 690 billion pounds. Badrawi stressed that the government does not have the vision to stop borrowing or limit borrowing to fill the deficit and increase resources. “Economic and service bodies are recording huge losses. The majority of new national projects are not based on real feasibility studies,” he said. Representative Dia Daoud said that while the government expects the budget deficit to exceed 300 billion pounds, it does not have an austerity plan. Also, many MPs demanded the suspension of national projects until they overcame the economic crisis.