Egypt’s external debt registered $137.4bn in September 2021, down by about $439.5m, compared to end-June 2021, according to the Central Bank of Egypt.
Despite the rise in net disbursements of loans and facilities by $366.7m, the depreciation of the US dollar exchange rate vis-à-vis other currencies comprising the external debt, led to a decrease of $806.2m in book value.
By original maturity, external debt reaffirmed its pattern of long-term debt predominance in September 2021. Long-term debt accounted for $125.9bn, or 91.6% of the total external debt, whereas short term debt accounted for $11.5bn or 8.4%.
By residual maturity , short-term debt accounted for 22.1% of total external debt inSeptember 2021, compared to 8.4% classified by original maturity.
Meanwhile, long- term debt expressed in terms of residual maturity made up 77.9% of total external debt, in comparison to 91.6% based on original maturity.
Long-term external debt registered $125.9bn (91.6% of total external debt) in September 2021, up by about $1.8bn compared to June 2021; of which:
Multilateral institutions’ debt reached about $52.7bn, up by $2.7bn, as compared to end of June 2021. The increase reflected new loans; mainly from the IMF ($24.1bn classified as follows: $11.9bn representing Extended Fund Facility $2.9bn representing Rapid Financing Instrument (RFI), $5.3bn representing three tranches of Stand-by Arrangement (SBA), and $4.0bn representing SDR allocations).
This is besides the loans from the International Bank for Reconstruction and Development (IBRD) ($11.6bn), the European Investment Bank (EIB) ($5.4bn), and Arab Fund for Economic & Social Development ($2.1bn).
Bonds issued abroad (non-resident holdings) reached $31.6bn, up by $2.9bn.
Bonds outstanding stock as of September 2021 includes: roughly $26.1bn of Eurobonds issued in US dollar, about $737.2m of Green bonds issued in US dollar, about $4.4bn of Eurobonds denominated in euro; and about $355.4m of sovereign notes.
Buyers’ and suppliers’ credit reached about $12.4bn, down by $352.1m. Other bilateral debt amounted to some $11.2bn, down by $194.3m. Repurchase Agreements (Repo) recorded $4.0bn in September 2021.
Long-term deposits placed at the CBE by some Arab countries decreased to $12.0bn, down by $3.0bn. These deposits are distributed as follows: $5.7bn by the United Arab Emirates; $2.3bn by Saudi Arabia; and $4.0bn by Kuwait.
Rescheduled bilateral debt reached around $1.6bn, down by $319.0m. Non-guaranteed debt of the private sector registered $457.9m, up by $66.0m.
Short-term debt decreased by about $2.2bn to about $11.5bn or 8.4% of total external debt. Its ratio to net international reserves dropped to 28.1% in September 2021 from 33.8% in June 2021.
Measuring currency composition of Egypt’s external debt is an important indicator that sheds light on the external debt exposure to currency markets’ volatility. Currency composition of the debt indicates that the US dollar is the main borrowing currency ($82.9bn). Other major currencies recorded $54.5bn, distributed as follows: SDRs4 was the runner-up ($25.3bn), followed by the euro ($17.2bn), the Kuwaiti dinar ($3.8bn), the Chinese yuan ($3.7bn), the Japanese yen ($2.5bn), and other currencies ($2.0bn).
Debt distribution by the creditor indicates that $52.7bn were owed to multilateral institutions5 (mainly; IMF $24.1bn, IBRD $11.6bn, EIB $5.4bn and ADF and AfDB $3.0bn).
It is worth mentioning that the IMF has approved a general allocation of Special Drawing Rights (SDRs) to its member countries of about SDR 456.5bn (equivalent to $650bn) effective from August 23, 2021, to boost the global liquidity. This allocation is deemed to supplement countries’ foreign exchange reserves and reduce their reliance on more expensive domestic or external debt to help countries cope with the economic and social impact of COVID-19 crisis. Egypt’s share of this new allocation is about SDR 1952.5m (equivalent to $2.8bn), representing 95.8% of its current quota at the Fund (SDR 2037.1m). Additionally, $19.7bn was owed to Arab countries mainly; UAE (6.5% of total external debt), Saudi Arabia (3.0%), and Kuwait (4.3%). Meanwhile, $9.3bn came from five members of Paris Club countries, namely; Germany ($2.8bn), Japan ($2.6bn), UK6 ($1.9bn), France ($1.6bn), and USA ($0.4bn). In addition, $6.7bn was owed to China.
The structure of Egypt’s external debt by the debtor sector in September 2021 reveals: the government remains the main obligor, with a share of around 60.1% of external debt. Its debt rose by $186.5m in September 2021 compared to the end of June 2021, reaching $82.6bn. Banks’ external debt increased by about $12.5m to $14.5bn. Other sectors’ debt slightly increased by some $3.3m to $15.5bn. On the other hand, the Central Bank’s external debt decreased by about $641.8m to $24.9bn.
Debt service reached $9.4bn (principal repayments registered $8.2bn, and interest payments $1.2bn) in July/September 2021/2022, compared to $4.9bn in July/September 2020/2021. The increase mostly reflects the increase in principal repayment by about $4.6bn, while interest payment retreated by about $6.4m.
As for external debt in terms of international comparison, Egypt’s debt remains within manageable limits. Based on IMF classification, comparing Egypt’s key debt indicators with those of other regional country groups8 shows that Egypt’s debt stock to GDP represented 32.6% in September 2021 (55.5% for Latin America and the Caribbean region’s average and 53.7% for the Middle East and Central Asia region’s average).
Egypt’s short-term external debt to total external debt in September 2021 registered 8.4% (12.6% for Latin America and the Caribbean region’s average, and 21.2% for the Middle East and Central Asia region’s average).
Egypt’s debt-service ratio9 registered 40.8% in the year ended in September 2021 (59.8% for Latin America and the Caribbean region’s average, and 32.3% for the Middle East and Central Asia region’s average).
Meanwhile, debt service to current receipts represented 24.7% in the year ended in September 2021.
Net International Reserves
During July/September 2021/2022, NIR increased by $0.2bn (against an increase of $0.2bn in the corresponding period a year earlier) to reach $40.8bn, thus covering 6.1 months of merchandise imports in September 2021.
The increase was an outcome of the rise in SDRs by $2.6bn and the decrease in foreign currencies by $2.3bn and in gold by $0.1bn.
During the preparation of the Report, NIR reached $41.0bn in January 2022, covering 6.2 months of merchandise imports.
Banks’ net foreign assets decreased by $5.0bn during July/September 2021/2022 (against an increase of around $4.3bn in the corresponding period a year earlier).
Foreign currency deposits with banks decreased by 1.3% during the period concerned, reaching $41.0bn in September 2021. In contrast, local currency deposits increased by 5.1%. As such, the
ratio of foreign currency deposits to total deposits made up 13.2% in September 2021.
Egypt’s IIP+ recorded net external liabilities (assets minus liabilities) of about $223.2bn in September 2021, up by 2.7%, compared to $217.4bn in June 2021. This increase in negative net IIP is mainly attributed to the rise in Egypt’s liabilities as compared to the end of June 2021.
Assets decreased by 5.4%, to reach about $74.2bn in September 2021, compared to $78.4bn in June 2021.
This decrease was mainly due to the following developments:
Other investments assets decreased by 15.7% to about $24.6bn.
Reserve assets increased just slightly by 0.6%, to reach about $39.7bn.
Direct investment abroad increased by 1.0% to about $8.8bn.
Portfolio investment abroad increased by 5.8% to about $1.1bn.
Liabilities increased by 0.6% to about $297.4bn in September 2021, from about $295.8bn in June 2021.
This increase mostly reflects the following developments:
Portfolio investment in Egypt increased by 6.5% to about $55.8bn.
Foreign Direct Investment in Egypt increased by 1.2% to about $135.9bn.
Other investments liabilities decreased by 3.1% to about $105.7bn.
Indicators
Egypt’s negative net IIP to GDP improved to about 52.9% in September 2021, from about 59.7% in June 2021.
Assets to liabilities decreased to about 25.0% in September 2021, from about 26.5% in June 2021.
SDR
The IMF has allocated about SDR 456.5bn (equivalent to $650bn) to its member countries on August 23, 2021.
Egypt’s share of this allocation is about SDR 1952.5m (equivalent to $2.8bn), recorded at the IIP as an increase in both long-term reserve-related liabilities on the Central Bank of Egypt (SDRs allocation), and in the reserve assets (holdings of SDRs) on the assets side.
