File Photo: Central Bank of Egypt s headquarters is seen in downtown Cairo. Al-Ahram
Since the onset of the war in Ukraine, Egypt’s external debt has started to rise in the 3Q of FY2021/2022 (January-March) to post $145.5 billion, up from $137.4 billion in the previous quarter, before easing in the 4Q of FY2021/2022.
The second half (2H) of FY2020/2021 (January-June 2021) witnessed a considerable increase in Egypt’s external debt compared to 1H of the same fiscal year, as external debt inched up to $137.8 billion, up from $129.1 billion by the end of the 1H.
The CBE data also showed that the government’s overall debt restored the level recorded in the 3Q of FY2021/2022 to reach $80.3 billion by the end of 1Q FY2022/2023, down from $82.2 billion by the end of FY2021/2022.
For the first time since May 2022, Moody’s has recently downgraded Egypt’s credit rating, Egypt's long-term foreign- and local-currency issuer ratings, from B2 to B3, changing the outlook from negative to stable.
This revision reflects the country’s reduced external buffers and shock absorption capacity while the economy undergoes a structural change towards a more export- and private sector-led growth economy under a flexible exchange rate regime, according to Moody’s.
Egypt currently owes over $52 billion in debt and its services to multilateral institutions, more than 44 percent of which is owed to the IMF, according to the CBE.
The rising debt, shortage of the hard currency, and the Egyptian pound depreciation have all placed a significant pressure on Egypt’s budget, forcing it to expand in securing more loans during FY2021/2022 and beyond.
In December, the IMF approved a $3 billion loan for Egypt under the fund’s Extended Fund Facility, extending over four years. The loanis part of other deals Egypt has pledged to conclude to fund the financing gap it is expected to suffer over the coming four years estimated at $17 billion.
Meanwhile, Egypt is set to resume its initial public offering (IPO) programme in March, through which it will offer 32 state-owned companies across 18 economic activities to be either floated in the Egyptian Exchange or offered to a strategic partner.