{"id":16739,"date":"2026-01-21T15:58:04","date_gmt":"2026-01-21T13:58:04","guid":{"rendered":"https:\/\/zawia3.com\/?p=16739"},"modified":"2026-10-24T19:14:17","modified_gmt":"2026-10-24T17:14:17","slug":"debts","status":"publish","type":"post","link":"https:\/\/zawia3.com\/en\/debts\/","title":{"rendered":"Egypt Repays Debt with More Debt: An Economy Living on the Next Bill"},"content":{"rendered":"

The Egyptian government is facing the<\/span> most difficult<\/span><\/a> debt year in its modern history, as external and domestic obligations pile up, imposing enormous pressures on the state’s resources and placing the economy before a decisive challenge between the ability to repay and the necessity of preserving social stability. With debt service<\/span> consuming<\/span><\/a> about half of public spending, and external obligations exceeding tens of billions of dollars annually, the government is seeking to contain the debt burden through multiple strategies, including rescheduling maturities, returning to international debt markets, selling strategic assets, as well as proposing debt swaps or the exchange of obligations for state-owned assets.<\/span><\/p>\n

These efforts come amid an official<\/span> discourse<\/span><\/a> that promises a notable reduction in public debt and an improvement in fiscal indicators, while<\/span> data<\/span><\/a> from the Central Bank and the reports of independent experts reveal a more complex reality, in which a shortage of liquidity overlaps with a structural inflation of indebtedness and a historic rise in the costs of debt service.<\/span><\/p>\n

Despite the escalation of official talk about the priority of reducing public debt, the government is still late in announcing an integrated<\/span> strategy<\/span><\/a> for managing indebtedness, amid contradictory statements and a multiplicity of initiatives in circulation without a clear institutional reference. So far, no official document has been published setting out the path of debt reduction, its tools and its timetable. Meanwhile, the statements range between affirming that assets will not be sold, the simultaneous promotion of exiting public companies, and talk of debt swaps, without clarifying the fundamental differences between these paths or the limits of each of them.<\/span><\/p>\n

Observers point out that this contradiction does not necessarily reflect a multiplicity of tools so much as it reveals the absence of a single economic narrative for managing debt, which weakens the ability of the markets and public opinion to assess the real risks of the state’s fiscal path. Likewise, the delay in announcing the strategy increases the cost of uncertainty, whether at the level of investor confidence or at the level of the public debate on the social and sovereign cost of the options for reducing debt.<\/span><\/p>\n

 <\/p>\n

Recommended reading:<\/b> Selling state assets: Egyptian sovereign sukuk between reducing debt and mortgaging the future<\/b><\/a><\/p>\n

Does the government have a path to reducing debt?<\/b><\/h1>\n

Recent months have witnessed an escalation in government statements about a “clear path” to reducing public debt, without disclosure of the precise details or of the political and economic consequences of this path. On several occasions, Prime Minister Mostafa Madbouly confined himself to<\/span> affirming<\/span><\/a> that the state is “working on a radical reduction in the volume of debt” and on strengthening indebtedness indicators, considering this issue a strategic priority, but one that is managed within an “integrated vision” that has not yet been presented to public opinion or to parliament as a complete official document.<\/span><\/p>\n

For his part, Finance Minister Ahmed Kouchouk presented a more detailed discourse in terms of numerical targets, speaking of an upcoming national strategy for debt management that<\/span> targets<\/span><\/a> the structural reduction of its ratio to gross domestic product, the diversification of funding sources, and a gradual shift from high-cost commercial borrowing to long-term concessional financing, in line with Egypt’s commitments to the International Monetary Fund.<\/span><\/p>\n

The Ministry of Finance is adopting a downward path for the debt of the general budget agencies, under which it <\/span>aims<\/span><\/a> to reduce it from 84% of gross domestic product in (2024\/2025) to 80% in (2025\/2026), then to 76% in (2026\/2027) and 72% in (2027\/2028), reaching 70% in (2028\/2029), before it declines to 68% by (2029\/2030). According to the plan, the achievement of these targets is attributed to maintaining a high primary surplus, alongside achieving strong real growth rates, assumptions that bet on the sustainability of a favourable economic environment, despite the domestic and international volatility surrounding it<\/span><\/p>\n

\n
Egypt\u2019s budget-sector debt reduction path, 2024\/2025 to 2029\/2030<\/figcaption>

The Ministry of Finance aims to reduce budget-sector debt from 84% of GDP in 2024\/2025 to 68% by 2029\/2030, assuming sustained high growth and a sustained primary surplus.<\/p>

<\/div>
<\/div>
Fiscal year<\/th>Debt-to-GDP ratio<\/th><\/tr><\/thead>
2024\/2025<\/td>84<\/bdi><\/td><\/tr>
2025\/2026<\/td>80<\/bdi><\/td><\/tr>
2026\/2027<\/td>76<\/bdi><\/td><\/tr>
2027\/2028<\/td>72<\/bdi><\/td><\/tr>
2028\/2029<\/td>70<\/bdi><\/td><\/tr>
2029\/2030<\/td>68<\/bdi><\/td><\/tr><\/tbody><\/table><\/div>
Official data<\/span>