Egypt’s Finance Minister Mohamed Maait said on Thursday the country’s gross public debt, the financial liabilities of the government sector, climbed by 13.1% to reach 95.6% of the GDP in the fiscal year (FY) 2022/23 that ended in June.
In a statement, Maait attributed the debt rise to “fluctuation in the currency exchange rate and decline of the local currency against the US dollars.”
“The government targets taking the gross debt down to 80% of the GDP in the next four years,” Egypt’s Finance Minister was quoted as saying in the statement.
It added that despite international unfavourable conditions that have driven up the prices of most strategic commodities due to supply chain disruptions that resulted in a severe shortage of production materials and an increase in fuel costs, financial performance indicators for the fiscal year 2022/23 were positive.
“We succeeded in decreasing the budget deficit to 6% from 6.1% in the FY 2021/22,” the Egyptian Finance Minister said.
Egypt’s initial surplus increased to 1.63% from 1.3% in the previous fiscal year, he added, noting that the results could have been better without the recent change of currency rate and its inflationary effects.
Egypt’s annual urban inflation rate rose to an all-time high of 36.5% in July, up from 14.6% in the same month a year earlier, the country’s Central Agency for Public Mobilization and Statistics (CAPMAS) announced earlier in the day.
The state treasury faced challenges of securing basic commodities when costs were hiking globally, Maait added.
External debt challenge
Egypt’s external debt more than quadrupled to $162.9bn in December 2022 from less than $40bn in 2015, central bank data showed.
The borrowing spree was driven by a need to finance a widening budget deficit and foreign currency shortages. Lenders were confident in Egypt’s ability to pay back the loans due to IMF deals in 2016 and 2020. Furthermore, Egypt received a boost in green financing after hosting the COP27 climate summit last year.
Borrowing in the last quarter of 2022 alone increased by $8bn, the central bank said. This was partly due to the government’s need to finance the import of wheat and other commodities amid the war in Ukraine.
