Egypt External Debt Rises 4X in 10 Years

Egypt has been dependent on bailouts in recent years, from both oil-rich Gulf allies and the International Monetary Fund. This is reflected in the country’s rising external debt in the past decade from US$ 40 billion to over US$ 160 billion earlier this year. The
external debt to GDP ratio is at ~40%, which is high, but still manageable, according to the International Monetary Fund.

While the external debt has increased through the past decade, Egypt is expected to pay US$ 32.7 billion in debt service in 2024. With Egypt addressing its debt obligations, it aims to create a favorable environment for economic growth, attract foreign investment, and strengthen its overall fiscal resilience. However, debt affordability is worsening as Egypt’s credit rating has shifted from B3 to Caa1, in October 2023.

Fitch Ratings, which just recently downgraded Egypt’s Long-Term Foreign-Currency Issuer Default Rating from B to B-, stated that “the impact of persistent high inflation (expected to average 33% in FY24) on living standards will be sizable and hard to reverse, despite the government’s efforts to address it.”

While the government agreed with private producers and retailers to cut prices on staple foods in October 2023, the move has not yet been successful.