Egypt Watch

Egyptian parliament approves €250m loan from France

On Monday, the Egyptian parliament approved a €250m loan from the French Development Agency for constructing a metro in Alexandria, the second loan for the same project in eight months. The Alexandria Metro would be the first to be implemented outside Greater Cairo.

According to experts, the loan is a continuation of a government policy that relies on external borrowing to spend on development projects at a time when the public debt has exceeded $160 billion. Total debt since President Abdel Fattah al-Sisi took power in 2014 has increased by more than $115 billion. Egypt’s debt equalled about 35.5% of the total debt of the Middle East and North Africa region in 2020.

The International Monetary Fund (IMF) has said that Egypt’s external debt would rise to 39.6% of GDP in the current fiscal year. The IMF has lowered its forecast for the growth of the Egyptian economy, expecting it to grow by only 4%. It also ruled out the recession of the inflation wave in Egypt soon, expecting inflation to decline to 7% in the fiscal year 2024-2025. Head of Mission of the IMF in Egypt, Ivana Holler, estimated the country’s financing gap in the next four years at about $17 billion. However, the IMF expressed its confidence in Egypt’s ability to pay its debts, expecting them to decrease to 7% of foreign reserves by the end of the reform program it supports.