Egypt’s external debt registered a decline of 2.5 percent during the first quarter of 2024 to $160.6 billion compared with the end of June 2023. The latest data from the central bank reveals that the decline was due to a decrease in net disbursements of loans and facilities by $3.8 billion. In addition, the appreciation of the U.S. dollar exchange rate and other borrowing currencies of the external debt led to a decline of $0.3 billion in book value.
The country’s debt fell by 7 percent annually in the 2023-2024 fiscal year to 89 percent, the central bank added.
External debt reaffirmed its pattern of long-term debt predominance at the end of March 2024, accounting for $135.3 billion of the total, whereas short-term debt accounted for $25.3 billion. Egypt’s long-term external debt accounted for 84.2 percent of total external debt, down by about $1.3 billion compared to June 2023. Meanwhile, short-term debt external debt declined by about $2.8 billion compared to June 2023.
Ras El-Hekma investment boost
Arab countries’ deposits at the Central Bank of Egypt (CBE) constituted about 43.9 percent (US$ 11.1 billion) of this stock. In late February, Egypt’s finances received a boost when it sold the development rights of Ras El-Hekma to the UAE for $35 billion. During the first quarter, the central bank reported the conversion of a $5.0 billion UAE deposit at the CBE towards the Ras El Hekma project.
Egypt’s external debt to GDP ratio reached 39.8 percent in the first quarter, down from 40.5 percent at the end of June 2023. Short-term external debt by original maturity to total external debt registered 15.8 percent, down from 17.1 percent at the end of June 2023.
In March 2024, the Central Bank of Egypt (CBE) moved towards a market-determined exchange rate to unify the official and parallel market exchange rates. In addition, the central bank increased key policy rates to control inflation and support the local currency.
These reforms, in addition to the announcement of the Ras El Hekma development project, have supported foreign investors’ confidence in the economy. However, Egypt is still facing several challenges including regional geopolitical tensions and Red Sea tensions, which continue to disrupt global trade and impact the Suez Canal’s receipts.
Read: UAE banks add 15 ATMs in Q1 2024, reaching 4,669
Balance of payments rises
Egypt’s overall balance of payments registered a surplus of $4.1 billion in the July-March period of the 2023/2024 fiscal year, the central bank statement added. The improvement was mainly due to a net capital and financial account inflow of $20 billion, compared to $8.1 billion during the same period of the previous fiscal year.
However, the country’s current account deficit widened to $17.1 billion from $5.3 billion. Trade volume declined by 10.1 percent to $ 77 billion or 19.1 percent of the GDP. Meanwhile, foreign direct investment in Egypt’s non-oil sector surged to $ 23.9 billion in the past year, up from $8.9 billion in the previous year.
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