The report shows that external debt has steadily risen over the past decade, climbing from $46.5 billion in 2013 to more than triple that level by 2023.
Long-term debt dominates, short-term debt eases
Long-term external debt reached $119.26 billion in 2023, compared to $111.09 billion in 2022. The public and publicly guaranteed sector accounted for most of this debt, standing at $117.38 billion in 2023.
Of this, debt to official creditors, including multilateral and bilateral lenders, rose to $67.86 billion, while liabilities to private creditors increased to $49.52 billion.
Bondholders represented $29.80 billion of private-sector exposure, with commercial banks and other private lenders holding $19.73 billion.
Short-term external debt recorded $29.48 billion in 2023, down from $30.25 billion in 2022.
IMF credit and SDR allocations decline
According to the report, Egypt’s use of International Monetary Fund (IMF) credit and Special Drawing Rights (SDRs) fell to $19.32 billion in 2023 from $21.75 billion in 2022.
IMF-related obligations have grown steadily since 2016, when they stood at $3.86 billion, following major lending arrangements with the fund.
The total IMF loans approved for Egypt since 2016 amount to approximately $30 billion.
Debt ratios show rising pressure
The report indicates that Egypt’s external debt-to-gross national income (GNI) ratio climbed to 44.4 percent in 2023, up from 35.4 percent in 2022, indicating rising external debt relative to the size of the economy.
The debt-service-to-exports ratio also increased to 30.4 pecent in 2023, compared to 23.2 percent in 2022.
Meanwhile, external debt stocks represented 238.6 percent of exports in 2023, up from 210.5 percent in 2022, reflecting the increasing weight of debt relative to Egypt’s export earnings.
Developing countries face record debt-payment gap
On a sectoral level, developing countries paid $741 billion more in principal and interest on their external debt than they received in new financing between 2022 and 2024, the largest gap in at least five decades, according to the report.
Despite the widening gap, most countries secured some relief in 2024 as global interest rates peaked and bond markets reopened, allowing several to avoid default through debt restructurings.
Developing countries restructured $90 billion in external debt in 2024, the highest level since 2010.
Bond investors also injected $80 billion more in financing than they received in repayments, enabling multiple large sovereign issuances, albeit at high costs, with interest rates averaging around 10 percent, nearly double pre-2020 levels.
“Global financial conditions might be improving, but developing countries should not deceive themselves: they are not out of danger. Their debt build-up is continuing. Policymakers should use this breathing room to put their fiscal houses in order, instead of rushing back into external debt markets,” said Indermit Gill, the World Bank Group’s chief economist.
The report also shows that the combined external debt of low- and middle-income countries reached an all-time high of $8.9 trillion in 2024, including $1.2 trillion owed by the 78 low-income countries eligible for International Development Association (IDA) support.
Interest rates on newly contracted public debt reached a 24-year high from official creditors and a 17-year high from private lenders.
Developing countries paid a record $415 billion in interest alone in 2024, funds the World Bank noted could have supported education, primary healthcare, and basic infrastructure.
In the 22 most heavily indebted countries, where external debt exceeds 200 percent of export revenues, an average of 56 percent of the population cannot afford the minimum daily diet required for long-term health. Eighteen of these countries are IDA-eligible.
According to the report, low-cost financing became increasingly scarce, except from multilateral development banks.
The World Bank remained the largest source of affordable financing for IDA countries, providing $18.3 billion more in new lending than it received in repayments, along with $7.5 billion in grants.
By contrast, official bilateral creditors withdrew, receiving $8.8 billion more in repayments than they disbursed, after taking part in restructuring efforts that in some cases reduced countries’ long-term debt by up to 70 percent.
With concessional financing limited, many developing countries pivoted to domestic markets. Among 86 countries with available data, more than half saw domestic government debt rising faster than external debt as governments turned to local banks and financial institutions.
Haishan Fu, the World Bank Group’s chief statistician, warned that although deeper domestic capital markets are a positive development, heavy domestic borrowing risks crowding out private-sector lending and exposes governments to higher refinancing costs due to shorter maturities.
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