Egypt’s external debt skyrocketed by 307%, while its Gross National Income (GNI) rose by 69%, according to the World Bank’s International Debt Report 2023. Among Low- and Middle-Income Countries (LMICs), Egypt recorded a $17.4bn short-term debt inflow in 2022, representing a staggering 19-fold increase from 2021 levels.
The report highlighted Egypt’s financial milestones, noting its issuance of the region’s first Samurai bond in 2022. This yen-denominated bond was issued in Tokyo under Japanese regulations, a landmark move for the Middle East and North Africa.
Breaking down Egypt’s public and publicly guaranteed debt for 2022, the report classified 36% as private debt and 37% as multilateral debt. Within private debt, bondholders made up 23%, with other commercial creditors accounting for 13%. Multilateral debt included contributions from the International Monetary Fund (14%), the World Bank’s International Bank for Reconstruction and Development (9%), and other multilateral creditors (14%). Bilateral debt represented 27% of Egypt’s obligations, with Saudi Arabia, Kuwait, and the UAE each accounting for 5%, and other bilateral sources contributing 12%.
Globally, developing nations faced unprecedented financial strain in 2023, spending a record $1.4trn on foreign debt servicing as interest costs hit a 20-year high. Interest payments alone surged nearly 33% to $406bn, constraining budgets for critical sectors such as health, education, and environmental initiatives.
The report underscored that the burden was most severe for the poorest nations eligible for loans from the World Bank’s International Development Association (IDA). These countries collectively paid $96.2bn to service their debts in 2023. While principal repayments decreased by 8% to $61.6bn, interest costs soared to $34.6bn, four times the amount a decade ago. On average, interest payments consumed nearly 6% of export earnings for IDA-eligible nations—the highest level since 1999—with some countries paying as much as 38%.
As credit conditions tightened, multilateral institutions, including the World Bank, became vital lifelines for vulnerable economies. Since 2022, foreign private creditors have received $13bn more in debt-service payments from IDA-eligible nations than they provided in new financing. In contrast, multilateral institutions injected $51bn more into these economies than they collected in debt-service payments during 2022 and 2023. Of this, the World Bank accounted for $28.1bn, nearly a third of the total support.
This data highlights the growing financial pressures on developing economies and underscores the critical role multilateral institutions play in alleviating their debt burdens amid tightening global credit conditions.
