CAIRO - 13 December 2023: Morgan Stanley deems the possibility Egypt's debt restructuring in 2024 as unlikely in its latest research note outlining nine surprises that would impact emerging markets.
Morgan Stanley doesn't consider the restructuring scenario as likely, however said that it still could happen due to the country's escalating borrowing costs.
"Given sufficient reserves to service upcoming external debt obligations in 2024, any restructuring will likely be pre-emptive in nature," the research note reads.
Data recently released by the Central Bank of Egypt (CBE) reveals that Egypt is obligated to pay $29.23 billion in external debt in 2024, followed by $19.43 billion in 2025 and $22.94 billion in 2026.
In November, the CBE reported a positive development, with Egypt's net international reserves (NIR) experiencing a $72 million increase, reaching a total of $35.173 billion. This increase in reserves provides Egypt with a stronger financial position as it considers potential debt restructuring strategies.
The International Monetary Fund (IMF) has also indicated the possibility of expanding Egypt's existing $3 billion loan program. During a recent press conference, the IMF's Communications Director, Julie Kozack, confirmed ongoing discussions and stressed the critical need for additional funds, especially in light of the recent conflict in Gaza.
Kozack emphasized that "additional financing will be critical to ensure the success in the implementation of the policy package for Egypt," acknowledging the potential impact of the conflict on Egypt's vital tourism sector.
While specific details regarding the size and terms of the potential financing have not been disclosed, Kozack stated that these details are part of the ongoing discussions between the IMF and Egyptian authorities.
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