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Egypt’s loan growth doubles its public debt

It is expected that the Egypt's public debt will rise during the current fiscal year to 116.8% of GDP.
It is expected that the Egypt's public debt will rise during the current fiscal year to 116.8% of GDP.

It is expected that the Egypt’s public debt will rise during the current fiscal year to 116.8% of GDP.

The Economist said that Egypt’s expansion in borrowing doubled its public debt and increased its fiscal deficit.

The newspaper suggested that the deficit will reach 8.5% of GDP in the current fiscal year (2020-2021). However, this deficit will shrink in the coming years, the newspaper said.

Less growth

Egyptian fiscal year begins in July and ends at the end of June of the following year.

The report said financing deficit would include domestic borrowing and bilateral and multilateral sources in the first years of the forecast period. On top of which is the issuance of more expensive sovereign bonds, which will lead to an increase in the debt-to-GDP ratio.

The report expected the Egyptian economy to grow by 2.4% during the current fiscal year. At the same time, the government figures indicate it will range between 2.8% and 4%.

The report said the recovery in vital sectors such as tourism would depend heavily on how the euro-zone consumer demand recovers and the COVID- 19 vaccination program.

Tourism represents 9.5% of the total workforce in the country and 5.5% of GDP.

Inflation

The report said inflation would remain declining during this year, reaching an average of 5.9% in light of expectations of continued consumer demand decline and lower commodity price inflation.

Egyptian pound exchange rate will be subject to fluctuations this year, due to the decline in investor sentiment towards the economies Emerging in global financial markets, or due to weak current account position.

The report expects that the pound’s exchange rate will decline slightly in the fiscal year (2022/2021) before stabilizing at 15.52 pounds for the dollar in the fiscal year 2025/2024.

In turn, the Egyptian Minister of International Cooperation, Rania Al-Mashat, said last Wednesday that her ministry could secure loans from abroad of $9.8 billion from multilateral development partners during 2020.

Central bank data earlier this month showed an increase in total external debt to about $125.3 billion at the end of last September. 

This is an increase of about $1.847 billion, as the number at the end of last June was at $123.5 billion.

Related:

Egypt’s central bank issues LE 14B in T-bonds Monday

Egypt’s EBE To Give Bonus Shares To Rise Capital

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