Egypt’s foreign debt increased by $3.5 Billion in the last three months of 2023 according to freshly released Central Bank Data. The above information revealed Egypt’s deepening debt crisis as the country’s foreign debt now amounted to 43% of its Gross Domestic Product.
According to Business Insider Africa, total foreign debt in the country climbed to $168.0 billion from $164.5 billion at the end of September and $162.9 billion at the end of December 2022.
Egypt’s external debt has grown four times over since 2015 as the country used it to finance mega projects and initiatives like the construction of new a capital city, developing existing infrastructure, buying weapons, and propping up an overvalued currency.
The Central Bank report claimed that 82.5% of the foreign debt is long-term and now amounts to 43% of the Gross Domestic Product.
The North African country’s woes were intensified by the Ukraine crisis which led to a severe shortage of foreign currency and the exodus of foreign investors.
In Response, The Government of Egypt sought for support from the International Monetary Fund (IMF).
The country deliberately weakened its currency by over 35% in a devaluation effort which ushered in additional loans from the IMF.
In March, the International Monetary Fund reassessed its loan program with Egypt and approved a $5 billion augmentation on its existing loan with Egypt.
The approval increased the Extended Fund Facility arrangement from the initially approved $3 billion in December 2022 to $8 billion.
In addition, the IMF suggested that Egypt implement tighter monetary policies to address the nearly 30% inflation and adopt a more flexible official exchange rate.
Egypt had to agree to certain measures to bolster its fledgling relationship with the IMF.
The country as part of the agreement with the IMF had to reduce spending on large government projects and also raise the price of various fuel products as part of its commitment to the IMF.