Egypt has a high public debt with an average of 97% of GDP over the past two decades.
Although it is up in value, i.e. +16% on average since 2015/2016, domestic public debt is down in relation to GDP, i.e. 87.2% in 2021/2022 against 94.9% in 2015/2016) , domestic public debt is down in relation to GDP, i.e. 87.2% in 2021/2022 against 94.9% in 2015/2016.
The latter is composed mainly of public securities, i.e. 90% on average since 2005. Among these securities, the share of short-term (T-Bills) and medium-term (T-Bonds) financing has continued to increase, rising respectively from 23% to 42% and from 8% to 38% between 2004/2005 and 2019/2020.
The rest is divided between certificates and T-Bonds issued with the Central Bank of Egypt, the share of which has been reduced from 43% to 16%.
This debt is largely financed by local banks. The total average maturity fell from 2.1 years in June 2016 to 3.1 years in June 2022, in accordance with the objectives set by the Ministry of Finance.
The weight of the external debt has nevertheless increased.
Support from the international community and Egypt’s return to the capital market have inflated the external public debt, which rose from $24 billion (7.3% of GDP) in June 2016 to $83.2 billion (17 ,3% of GDP) in 2021/2022.
It should be noted that the scope of the external public debt does not include the external debt of the ECB, including in particular the deposits of the Gulf countries, which came to intervene massively to support the Egyptian economy following the various crises.
The ECB’s debt amounted to 40.9 billion at the end of June 2022 compared to $27.9 billion in March 2020, an increase of 46.7%. Government and ECB debt represent 79% of Egypt’s total external debt compared to 54.3% in March 2020.
Egypt’s fiscal stance characterized by a chronic public deficit and high debt levels over the past two decades has resulted in significant financing needs.
Nevertheless, fiscal consolidation, public debt management and its transparency are gradually improving.
Fiscal consolidation, supported by the IMF during its various interventions, has enabled Egypt to establish and maintain a primary surplus while the debt profile is improving.
Since 2015, a three-year debt management strategy has been formulated and made public.
The latest strategy (2021-2024) published in December 2020 aims to reduce public debt to 80% of GDP, extend maturities to 4.5/5 years and reduce the financing requirement to less than 30% of GDP June 2024.
A new law on the management of public finances was also adopted in February 2022.
It will contribute to the establishment of a medium-term budgetary framework and provides for the implementation of program budgeting within two years.
Source : Cairo Economic Service French Embassy in Lebanon