CAIRO – 27 June 2024: Egypt repaid a substantial portion of its domestic and external public debt, amounting to $25 billion since March 2024, according to the Institute of International Finance (IIF).
This debt repayment represents a noteworthy 7% of Egypt's GDP, highlighting the country's commitment to fiscal consolidation. The IIF attributes this progress to a development deal signed with the UAE in February. This deal included two key elements: the conversion of Emirati deposits and Eurobond repayment.
Emirati deposits at the Central Bank of Egypt (CBE) worth $11 billion were converted into local currency investments, reducing Egypt's external debt burden. An additional $2 billion in Eurobonds were also repaid.
Egypt has set ambitious targets for its upcoming fiscal year (FY 2024/2025), aiming for a primary surplus of 3.5% of GDP. This ambitious target, the highest since the pandemic, reflects the country's commitment to fiscal discipline.
However, investors acknowledge this goal might be challenging. They point out that a portion of this surplus is expected to come from proceeds of the government's Initial Public Offering (IPO) program. This raises questions about the sustainability of achieving the target solely through spending cuts and economic growth.
Despite the challenge, Egypt is taking proactive steps to manage its debt burden. Half of the IPO proceeds are earmarked for debt reduction. This strategy, coupled with the recent $25 billion debt repayment, demonstrates Egypt's commitment to long-term financial stability.
Comments
Leave a Comment