Egypt's foreign debt up annually amid economic crisis

Debt has been piling up as a result of external factors such as the pandemic and the Ukraine war

Egypt's inflation in January was about 25 per cent, the highest in five years. AP

Egypt's foreign debt increased by $17.6 billion annually to reach $154.98 billion at the end of the first quarter of the 2022 - 2023 fiscal year, which ended in September 2022, even as the country struggles to revive its economy.

The amount, however, was down marginally from $155.7 billion at the end of the previous quarter, according to central bank figures quoted by Naeem brokerage.

Egypt's external debt as a percentage of gross domestic product is 33.9 per cent, compared with 34.1 per cent in the quarter ended in June and 32.6 per cent in the first quarter of the fiscal year 2022, according to estimates from Naeem.

Of the total foreign debt, it said long-term debt was at $127.57 billion compared with $129 billion in the last quarter of 2022. Total short-term debt stood at $27.4 billion at the end of September.

"Egypt’s external debt obligations have risen significantly in recent years, impacted by exogenous factors, up by 40 per cent in absolute terms since the onset of Covid-19, which is currently being followed by the Russia-Ukraine crisis," Naeem said in a note.

Shoppers at a butcher's shop n Giza, Egypt. Reuters.

"With sizable short-term debt obligations (including long-term debt maturing within a year and excluding short-term GCC deposits) payable within a year, we expect a sizable chunk of fresh external financing proceeds to be used to refinance the existing stock of debt," it added.

Now among the most-indebted nations in the region, Egypt is facing an economic crisis chiefly caused by the Russia-Ukraine war and the coronavirus pandemic before it.

The crisis is manifested in a foreign currency crunch that has affected imports and subsequently caused shortages of a wide range of items and hit local industries. The Egyptian pound has suffered a 50 per cent slide in its value against the dollar.

Inflation in January was about 25 per cent, the highest in five years, and the import bill of the most populous Arab nation soared due to the Russia-Ukraine conflict, particularly purchases of wheat and oil products.

President Abdel Fattah El Sisi said this week that Egypt's foreign currency gap is between $20 billion and $30 billion.