Egypt has repaid over $20bn worth external debts to international financial and investment institutions in the past four months, and expects to repay more $5bn within 12 months, a banking sector source has revealed.
In statements to the Middle East News Agency (MENA), the source added that Egypt’s foreign debts constitute less than 33% of GDP.
He noted that this figure is very low according to international standards that divide external debt slides on countries into three segments. Egypt has been placed in the lowest segment, due to the decrease in its external debt to GDP ratio.
The source added that Egypt has paid off its short-term debts, and replaced them with a long-term loan portfolio, some of which extend for 40 years. This brings the country’s long-term debt ratio to nearly 90% of the volume of debts it owes.
He pointed out that Egypt had agreed on loans worth $13bn from the International Monetary Fund (IMF) and the international market. These are long-term loans from which Egypt has so far obtained $7.77bn, including $2.77bn from the IMF as part of the rapid financing instrument, and a further $5bn worth of bonds sold last month. This came against repaying the $20bn commitment in the last four months and $5bn that will be paid before June 2021.
The source stressed that Egypt’s external debt is internationally secure, compared to other countries in emerging markets whose foreign debt are over twice the size of Egypt’s.
According to Central Bank of Egypt (CBE) data, Egypt’s external debts amounted to $112.6bn at the end of 2019, including $101.3bn in long-term debt.
The source pointed out that the size of Egypt’s economy has doubled since 2011, from EGP 800bn to over EGP 6trn. The growth indicates that the country’s economic reform programme of 2016-2019 has succeeded in increasing the state’s resources across various economic sectors, despite the ongoing repercussions of the novel coronavirus (COVID-19) pandemic.
Due to the ongoing global pandemic, it is currently necessary to maintain foreign cash flows to preserve the gains of the economic reforms.
The source emphasised that the price stabilisation of goods and services comes on the back of the Egyptian economy using the available tools and the confidence of international markets as a major source of funding. This has helped Egypt achieve low inflation levels of 2 and 4.7% in May, indicating that the state’s actions during the current crisis targeted two main trends, namely levels of economic operation and goods prices and availability.
The source explained that the fiscal and monetary policies undertaken in the recent period were aimed at ensuring the economy’s continued operation and the availability of goods and services without disturbance.
