Infographic: Egypt’s external debt decreased for the first time in more than 4 years

Egypt’s external debt remains reassuring and within internationally secure borders, compared to other emerging market countries, especially since the economic reform program has succeeded in increasing state resources in various economic sectors and preserving policy balance. fiscal and monetary, especially in this difficult period for world economies after the pandemic. Corona, which contributed to a significant decrease in debt levels.

In this sense, the Press Room of the Council of Ministers issued a report containing infographics highlighting this decline, which promotes the arrival of foreign debt rates at the best level in years.

The report stated that Egypt managed to reverse the external debt curve to register a decline for the first time in more than 4 years, as total external debt decreased in the first quarter of 2020 by 1.2%, compared to the previous quarter.

The report noted that total external debt had increased by 9.9% during the first quarter of 2019, compared to the previous quarter, and 6.4% in the first quarter of 2018, compared to the previous quarter. , and 9.8% in the first quarter of the year. 2017, compared to the previous quarter, and 11.8% in the first quarter of 2016, compared to the previous quarter.

The report highlighted the decrease in the ratio of short-term debt to total external debt, which reached 9.3% in the first quarter of 2020, compared to 11.7% in the first quarter of 2019, 13% in the same quarter of 2018 and 17.1% in the same quarter of 2017 and 12.8% in the same quarter of 2016.

In the same context, the report explained, the ratio of short-term debt over net international reserves decreased, reaching 25.7% in the first quarter of 2020, compared to 28.1% in the first quarter of 2019, 27 % in the same quarter of 2018 and 44 0.2% in the first quarter of 2017 and 41.3% in the same quarter of 2016.

It should be noted that the low levels of short-term foreign debt contribute to the financial conditions of the economy being stable and not subject to deterioration, according to the International Monetary Fund.

This report highlighted the economic indicators that contributed to the improvement in the performance of external debt thanks to the success of the economic reform program, represented by a 10.7% drop in the exchange rate of the dollar against the pound to reach 15.8 pounds at the end of September 2020, up from 17.7 pounds at the end of September 2017, as well as an increase Foreign exchange reserves increased by 6.4% to reach $ 38.4 billion in August 2020 (preliminary statement) compared to $ 36.1 billion in August 2017, noting that reserves reached $ 45.5 billion in February 2020, before the Corona crisis, an increase of 71.7% compared to the same month. 2017 year.

The increase in tourism revenue also contributed to the improvement in the performance of external debt, which increased by 76.9% to reach $ 2.3 billion during the first quarter of 2020 compared to $ 1.3 billion during the same quarter of 2017, and increased remittances from Egyptians working abroad also contributed to the improvement in performance. External debt, which increased by 36.2% to reach $ 7.9 billion during the first quarter of 2020, compared to $ 5.8 billion during the same quarter of 2017, in addition to an increase in the commodity exports by 21.8% to reach $ 6.7 billion during the first quarter of 2020, compared to $ 5.5 billion during the same quarter of 2017, and finally, the Suez Canal revenue increased by 16.7%, to reach $ 1.4 billion during the first quarter of 2020, compared to $ 1.2 billion during the same quarter of 2017.

Regarding the positive signs and the expectations of the leading international institutions to improve Egypt’s external debt performance, the report indicated that “The Economist” predicted that Egypt’s external debt performance will be among the best rates in the world. compared to the world’s emerging markets and the best in the region in 2020.

For its part, the International Monetary Fund indicated that despite expectations of an increase in Egypt’s external debt as a percentage of GDP in 2020/2021, it will continue to decline gradually until reaching 25.3% in 2024/2025.

Fitch also praised Egypt’s continued accumulation of foreign exchange reserves, noting that it reflects its ability to hedge its short-term payments in foreign currency.

In turn, Moody’s clarified that the existence of a broad domestic financing base in Egypt and a strong foreign exchange reserve that exceeds the payments of the external debt during the next year would help to overcome the capital outflow periods as a result of the crisis. of the Crown.

Finally, BNP Paribas confirmed that the liquidity of foreign currencies within the banking system has improved significantly in recent months, which led to the strengthening of the pound and an increase in the ability to pay foreign debt in the short term.

In a related context, the report tracked Egypt’s external debt to be among the best compared to the world’s emerging markets, as of the end of March 2020, registering 31.7% as a percentage of GDP.

The report highlighted that Brazil’s external debt registered 18.6% as a percentage of GDP, India registered 20.6%, the Philippines 21.4% and Russia 27%.

South Korea’s external debt was 29.9% of GDP, Thailand 32.4%, Pakistan 34.4%, Indonesia 34.5%, Peru 35.1%, South Africa 44.1%, Colombia 44.2 % and Hungary 50.2%.

The report also showed that Turkey’s external debt registered 56.9% as a percentage of GDP, Poland 59%, Argentina 62.6%, Malaysia 64.4% and finally Chile 82.9%, highlighting that the countries were chosen according to Morgan Stanley’s Emerging Markets Rating.

Infographic: Egypt’s external debt decreased for the first time in more than 4 years

Infographic: Egypt’s external debt decreased for the first time in more than 4 years

Infographic: Egypt’s external debt decreased for the first time in more than 4 years

Infographic: Egypt’s external debt decreased for the first time in more than 4 years