Egypt could restructure debt in 2024: Morgan Stanley

Ahram Online , Tuesday 12 Dec 2023

Egypt could seek to restructure its debt in 2024 to mitigate the burden of debt service payments through 2025, according to a research note by Morgan Stanley titled "Nine Surprises for 2024".

Morgan Stanley s headquarters. LinkedIn.
Morgan Stanley s headquarters. LinkedIn.


"Egypt could choose to pre-emptively restructure as it would be mindful of a rising interest burden," Morgan Stanley said.

Morgan Stanley doesn't consider the restructuring scenario as likely, as Egypt would probably manage its problems without needing to make huge changes. However, the American investment bank said that it still could happen.

The restructuring process could be “pre-emptive in nature,” Bloomberg reported on Monday, citing a research note by Morgan Stanley.

Debt restructuring by countries can include extending due dates of debts and maturity dates of sovereign bonds, along with other measures including moving debt from private to public institutions or reducing the yields payable on sovereign bonds, according to Investopedia.

Egypt is required to pay $29.23 billion in external debt service in 2024, $19.43 billion in 2025, and $22.94 billion in 2026, according to data released by the Central Bank of Egypt (CBE).

The country’s total debt reached $164.73 billion by the end of June.

Of this total, Egypt owes $52.9 billion to multilateral institutions, of which the International Monetary Fund (IMF) accounts for 40 percent, or $21.2 billion, according to data released by the Central Bank of Egypt (CBE).

The other major multilateral creditors are the International Bank for Reconstruction and Development ($12.3 billion), European Investment Bank ($4.8 billion), African Development Bank ($2.9 billion), and Arab Fund for Economic and Social Development ($2.2 billion).

Additionally, $46.2 billion is owed to Arab countries, including the UAE ($20.9 billion), Saudi Arabia ($12.2 billion), Kuwait ($7.1 billion), and Qatar ($4.0 billion).

Meanwhile, $8.8 billion is owed to five members of Paris Club countries, including Germany ($2.4 billion), Japan and France ($2.3 billion each), and the UK and the US ($0.9 billion each). In addition, $8.3 billion is owed to China.

Debt service accounted for 60.3 percent of Egypt’s total expenditure during the first quarter of the fiscal year (FY) 2023/2024 which ended in September.

Last week, Julie Kozack, the International Monetary Fund’s (IMF) director of strategic communications (COM), told Ahram Online that the IMF is currently discussing with Egyptian authorities providing additional financing to ensure the successful implementation of the policy package for Egypt to help it withstand the repercussions of the recent conflict in the Middle East and its potential adverse impact on tourism revenues.

Egypt is engaged in a $3 billion four-year loan agreement with the IMF signed in December 2022. It received the first of eight tranches the same month. Cairo was slated to receive two more tranches in March and September of this year upon the conclusion of reviews of the economy by the fund, but these were delayed.

*An earlier version of this article cited Morgan Stanley as saying that the restructuring scenario is “likely”.

Short link: