Egypt's debts - which witnessed a sharp increase in the past decade - are set to reach record levels at the end of this year, and the Egyptian economy's troubles are expected to increase with the consequences of the Covid-19 epidemic and the effects of Russia's war on Ukraine, in addition to the suffering of tens of millions of Egyptians as a result of high prices Food.

This came in a report by the British "Middle East Eye" website, which said that Egypt's debts amounted to $392 billion by the end of the 2020-2021 fiscal year, including $137 billion in external debt, which is 4 times higher than it was in 2010 ($33.7 billion), and also includes internal debt of $255 billion - according to the Central Bank of Egypt - nearly double the domestic debt in 2010.

And the website quoted "Daily News Egypt" last week that the figures also revealed that the government is expected to borrow 634 billion Egyptian pounds (34 billion dollars) from the local market in the last quarter of the 2021-2022 fiscal year.

The site commented that Egypt's foreign debt has been growing rapidly since President Abdel Fattah al-Sisi took power in 2014;

It amounted to $46.5 billion in 2013, then decreased to $41.7 billion in 2014, before rising in the following years, to reach $84.7 billion in 2016, then to $100 billion in 2018, and $115 billion in 2019.


External Debt Ratio

The ratio of external debt to GDP is now 33.9%, which is relatively within safe limits according to international standards, which consider the ratio to be safe as long as it is less than 60%, but when it is added to the domestic debt ($79.4 billion at the end of the 2012-2013 fiscal year, Now $255 billion) the total debt to GDP ratio is 89.84%, well above safe limits.

In 2021, Egypt ranked 158th out of 189 countries in debt-to-GDP ratio, and 100th in debt per capita.

In January, the government debt-to-GDP ratio reached 91.6 percent, up from 87.1 percent in 2013.

The government says it hopes to reduce the total debt-to-GDP ratio to 85 percent in the next three years, a goal that is difficult to achieve given Cairo's plans to borrow an additional $73 billion through bond sales this year.

 The second largest client of the IMF

IMF loans to Egypt since 2016 are much higher than the fund's quota, and therefore interest rate surcharges are imposed.

According to a report issued by the Project on Middle East Democracy (POMED), Egypt has become the largest client of the International Monetary Fund after Argentina.

Egyptian economists expressed their fears that most of the debt will go to service old debts or pay off debts instead of investing in productive activities.

The report of "Labomed" stated that the Egyptian government has spent the bulk of its available revenues in recent years on giant projects that "have a symbolic value, not an economic one," such as the New Administrative Capital project, which is worth 58 billion dollars in the desert outside Cairo;

And weapons holdings whose exact value is unknown, but made the country among the top 5 buyers of weapons in the world, a nuclear reactor worth $25 billion to produce energy in a country with a surplus of electricity, and an increase in the Suez Canal capacity of $8 billion, and did not bring a noticeable increase in fees. transit, which rose to only $5.8 billion in 2020 from $5.6 billion in 2017, according to the report.

The site indicated that the total spending in the 2020-2021 budget amounted to $93 billion, of which $30.7 billion went to debt service.

According to the British Middle East Eye website, economists expect Egypt's external and domestic debt to continue to rise during the coming period for a number of reasons;

Among them is that the war in Ukraine deprived Egypt of an important source of national income, which is tourism, as nearly a third of tourist flows in recent years came from Russia and Ukraine, in addition to raising the interest rate and depreciating the currency to prevent foreign capital from escaping to other markets. .

For this reason, Egypt called on the oil-rich Gulf states to save it, including depositing billions of dollars in its central bank to support international reserves and pump investments into the Egyptian market.


What happens to foreign reserves?

The Ukrainian war also affected foreign reserves, which were just under $41 billion at the end of last February, as they had fallen by about $4 billion in March to $37.082 billion.

Economists called for reducing imports, increasing exports, creating new tourist markets to compensate for the losses caused by the war in Ukraine, and encouraging Egyptian workers in other countries to preserve the remittances they send home, according to Middle East Eye.

What effect does this have on the population?

Middle East Eye says that the economic impact of the war in Ukraine is expected to be felt for many years, and will be embodied in almost doubling food prices, while some Egyptian families will be forced to give up another basic commodity after they were giving up one after the other due to high prices.

This comes at a time when Egyptian President Abdel Fattah El-Sisi said on April 12 that the current crisis may last for a long time, and asked government officials to make efforts to curb the rise in commodity prices.

The government said that the annual inflation rate jumped to 12.1% last March, up from 4.8% in the corresponding month of last year.

The government also said that urban inflation rose to 10.5% in March from 8.8% in February, citing the rise in food and beverage prices and the increase in transportation, education, hotel and restaurant costs.