Despite recent government actions and support from international lenders, Egypt’s foreign debt remains a concern. Additionally, the ongoing devaluation of the Egyptian pound presents a persistent challenge that necessitates continuous management.

According to data from the planning ministry, Egypt’s foreign debt rose by $3.5 billion to $168.0 billion in the final quarter of 2023. This increase follows a decade of substantial borrowing to finance government projects, quadrupling the country’s external debt.

Despite the mounting debt, there are signs of optimism. The central bank previously reported that total external debt stood at $164.5 billion in September 2023, accounting for 42.4% of GDP. Also, a significant portion of this debt, approximately 81.6%, is classified as long-term debt, indicating a favorable composition.

Finance Minister Mohamed Maait projects a GDP growth of 2.8% for the current fiscal year, with expectations of it rising to 4.2% next year. Meanwhile, the International Monetary Fund (IMF) has forecasted a slightly higher growth rate of 3.0% for 2024.

To stabilize the economy, Egypt’s central bank raised interest rates by 6% in March and transitioned to a more flexible exchange rate system. Consequently, the Egyptian pound has depreciated by over 60% against the US dollar.

The IMF recently enhanced its support for Egypt by increasing its loan program from $3 billion to $8 billion and extending its duration to 2026. Additionally, the IMF anticipates a notable improvement in Egypt’s debt-to-GDP ratio, projecting a decline from a projected high of 92.7% in 2023 to 76.4% by 2028.

Egypt’s commitment to repaying its existing loans of $42.3 billion in 2024 is supplemented by substantial financial support from international institutions. The European Union recently pledged over $8 billion, while the World Bank committed $6 billion over three years to bolster the country’s budget and private sector.