Egypt Watch

Debt addiction: Egypt exempts German bank from taxes to take EUR 15 million loan

On Thursday, President Abdel Fattah El-Sisi approved a German loan of 15 million euros in exchange for a tax exemption for the KfW Development Bank.

According to the decision, the Egyptian government will exempt the German bank from direct taxes and other public burdens. The Egyptian government will also bear the value-added tax, customs tax, and any similar indirect taxes. Statista has said Egypt’s national debt rose from $149.6 billion in 2017 to $288.9 billion this year. The online platform specialized in the market and consumer data has expected the rise to continue in the coming years, reaching more than $506 billion in 2027.

Egypt owes $52 billion to multilateral institutions, 44.7 per cent of which is to the International Monetary Fund (IMF), according to the Central Bank of Egypt. Egypt has received three loan packages from the IMF, not counting the loan approved a few days ago, according to the Egyptian Presidency’s State Information Service.

The World Bank issued a report last year showing Egypt’s foreign debts increased from $36.77 billion in 2010 to about $131.58 billion in 2020. The Egyptian external debt in 2020 represented about 37% of the GDP. 60% of Egypt’s population is either poor or economically vulnerable. Egypt’s debt is the highest in the Middle East and North Africa, equalling about 35.5% of the region’s total debt in 2020.

The country’s inflation increased significantly, rising from 5.89% in 2021 to 18.7% in November 2022. According to experts, the Egyptian authorities have spent billions of dollars on major projects, most of which appear to add symbolic rather than economic value.