World Bank data has shown that Egypt’s external debt rose to $157.8 billion last March, from $145.5 billion last December, an increase of about $12.3 billion in three months.
According to the World Bank, Egypt should pay loan instalments and interest worth more than $33.36 billion between last March and next March. “The accumulation of external debt to these levels was based on a monetary policy that continued for eight consecutive years and was based on the need to maintain foreign exchange reserves at the level of approximately $40 billion,” said former First Vice President of the Arab Banking Corporation, Sherif Othman. “Part of this equation was based on extending the life of the debt, i.e. replacing long-term loans with short-term loans, in the hope that that might improve the current account, which did not happen. Also, global conditions led to the flight of foreign investments, and more need for external borrowing.”
External debt represents more than 425% of foreign exchange reserves in Egypt. Last June, data from the Central Bank of Egypt revealed that net foreign assets in the banking system had fallen to more than minus 305.1 billion pounds in May, a decrease of 67.7 billion pounds compared to net foreign assets in April.