Egypt Foreign Debt Drops by $7.4 Billion in Q1 2024
In a significant development for Egypt’s economy, the country’s foreign debt has experienced a notable decrease of $7.4 billion in the first quarter of 2024. This positive shift, according to data from the Central Bank of Egypt, marks a crucial turn in Egypt’s financial landscape.
The Impact of UAE Investment
One of the key factors contributing to this reduction in foreign debt is the substantial $35 billion investment from the United Arab Emirates. In February 2024, Egypt secured this investment by selling development rights to Ras El-Hekma. This infusion of capital has not only boosted Egypt’s finances but also played a crucial role in reducing its debt obligations.
Decline in Total Foreign Debt
As of the end of March 2024, Egypt’s total foreign debt stood at $160.6 billion. This figure represents a decline from $168.0 billion at the end of December 2023 and $164.5 billion at the end of September 2023. The reduction in debt underscores the effectiveness of recent financial strategies and investments in stabilizing Egypt’s economic position.
Financial Support from the International Monetary Fund
In addition to the UAE’s investment, Egypt secured an $8 billion financial support package from the International Monetary Fund (IMF) in March 2024. This agreement includes a commitment to a free-floating currency, which is expected to further stabilize Egypt’s economy and enhance its financial resilience.
Long-Term Debt and GDP Ratio
The structure of Egypt’s foreign debt remains largely long-term, with 84.2% categorized as such. This long-term nature of the debt contributes to a more manageable financial outlook. Notably, the foreign debt as a percentage of the gross domestic product (GDP) has decreased to 39.8% from 43% in December 2023. This improvement reflects a more favorable economic balance and a stronger financial footing for Egypt.
Egypt’s substantial reduction in foreign debt by $7.4 billion in the first quarter of 2024 highlights a positive trend in the country’s economic management. The combination of UAE investment and IMF support has played a pivotal role in this development, reinforcing Egypt’s financial stability and growth prospects. As Egypt continues to implement strategic financial policies, the outlook for its economy appears increasingly promising.
