Ashraf Arabi, President of the Institute of National Planning (INP), said that the institute has prepared a comprehensive study for a unified public debt law in Egypt. This is a vital step for any country in the context of overall debt governance, similar to many other countries.
Arabi told Daily News Egypt that the institute supports the enactment of a unified public debt law, aiming for governance and oversight by the Egyptian Parliament in the local debt process. He stressed the importance of this law, as Egypt does not have one. Arabi said that this law would help in better debt governance, and slow down the issuance of treasury bonds, which are a form of debt.
He added that Egypt would benefit from this law if enacted, as it would limit the borrowing process. Clear standards would be set, restricting borrowing, and applying certain criteria to projects that borrow, such as generating foreign currency.
Arabi explained that the INP had prepared the study and submitted it to the Egyptian Parliament and relevant government bodies, stating that the government’s executive decision would prevail.
In a related context, the institute recently presented a research paper on the sustainability of government debt. The paper included a set of necessary measures and recommendations to maintain the sustainability of government debt and reduce it to the desired level. These measures include reinforcing the sustainable economic growth path as a key pillar for sustaining both government and non-government debt. It also involves activating the government’s policy on state ownership and enhancing the role of the private sector in economic activities, along with adopting a flexible and competitive monetary policy based on foundations that enhance the private sector’s capacity to invest and export.
The research paper, reviewed by Daily News Egypt, recommended establishing transparency and disclosure rules to differentiate between government and non-government debt and disclosing the debts of all public companies. It also urged achieving efficiency and effectiveness in coordinating fiscal and monetary policies regarding debt management, ensuring the sustainability and reduction of this debt to the desired level.
Arabi clarified that the most important sustainability indicator to measure debt levels in Egypt is the debt service ratio for commodity and service exports, representing the dollar flow. He explained that monitoring this ratio is crucial, as an increase in this ratio is an early warning sign.
He emphasized the need for Egypt to undertake radical structural reforms in three main axes to increase the dollar inflows. These axes include increasing production, exports, and investing in human resources. Arabi noted that the Egyptian government has already started taking steps in this direction, with plans to speed up the implementation pace in 2024.
