A senior source at the Central Bank of Egypt (CBE) revealed a significant reduction in Egypt’s external debt. In May 2024, the debt stood at $153.86bn, down from $168.03bn in December 2023. This decrease of $14.17bn, approximately 8.43%, represents the largest reduction in Egypt’s external debt in its history.
The source also highlighted that alongside this substantial reduction in external debt, Egypt’s net foreign reserves reached an all-time high of $46.38bn in June 2024. This marks an increase of $13.26bn since August 2022. The current reserves can cover approximately 7.9 months of the country’s import needs, far exceeding international standards for safe reserve levels.
Foreign currency inflows to the local market have experienced enormous growth, increasing by about 200%. This includes a remarkable rise of over 100% in remittances from Egyptians abroad compared to pre-currency unification levels.
The strong influx of foreign currency has helped eliminate the foreign asset deficit of the CBE. From a deficit of $11.4bn in January 2024, it turned into a surplus of $10.3bn by June 2024. Additionally, the net foreign assets of banks improved to $4.6bn in May 2024, compared to a negative $17.6bn in the same month last year.
The source emphasized that bold monetary policy decisions since August 2022 successfully controlled inflation rates in the Egyptian market. In June 2024, inflation rates reached 27.5%, the lowest since February 2023. This stabilization of local prices has reduced pressure on Egyptian households and enhanced confidence in the local currency and business environment.
Regarding external indicators, the source confirmed a significant improvement in the yield curve for Egypt’s dollar-denominated bonds maturing in January 2027. The yield fell from 22.86% in October 2023 to 9.2% in June 2024, a reduction of about 13 percentage points. This decrease lowers the cost of borrowing from international markets and demonstrates international investors’ confidence in Egypt’s reform measures.
Furthermore, one-year Credit Default Swap (CDS) contracts improved by approximately 2,333 basis points from May 2023 to June 2024, reaching 346.3 basis points. This indicates reduced risk in Egypt’s sovereign debt instruments and increased confidence from global markets in the local economy’s ability to meet international obligations. These positive developments have influenced credit rating agencies’ outlook on the Egyptian economy, leading to adjustments in their future projections following the currency unification in March 2024.
