Egypt’s external debt registered $157.8bn in March 2022, up by about $19.9bn, compared to June 2021. Despite the rise in net disbursements of loans and facilities by $22.2bn, the depreciation of the other currencies comprising the external debt exchange rate vis-à-vis the US dollar led to a decrease of $2.3bn in book value.
Breakdown by Maturity
By original maturity, external debt reaffirmed its pattern of long-term debt predominance in March 2022. Long-term debt accounted for $131.4bn or 83.3% of the total external debt, whereas short-term debt accounted for $26.4bn or 16.7%.
By residual maturity, short-term debt amounted to about $42.2bn in March 2022. Meanwhile, long-term debt reached about $115.6bn.
Breakdown by Type
Long-term external debt registered $131.4bn (83.3% of total external debt) in March 2022, up by about $7.2bn compared to end of June 2021; of which:
Buyers’ and suppliers’ credit reached about $16.6bn, up by $3.8bn.
Multilateral institutions’ debt reached about $52bn, up by $2.1bn, as compared to June 2021.
Bonds issued abroad (non-resident holdings) reached $29.4bn, up by $660.9m.
Bonds outstanding stock as of March 2022 include: roughly $23.6bn of Eurobonds issued in US dollar, about $4.2bn of Eurobonds denominated in euro, about $737.2m of Green bonds issued in US dollar, about $493.1m of the newly Samurai bonds issued in Japanese yen in March 2022 with a nominal value of JPY 60bn, about $355.4m of sovereign notes, and repurchase agreements (Repo) reached about $4.8bn in March 2022, up by $750m. Other bilateral debt amounted to some $11.4bn, up by $80m.
Non-guaranteed debt of the private sector registered $764.5m, up by $372.6m. It includes the Eurobonds issued by the Commercial International Bank last July 2021 with a nominal value of $100m.
Long-term deposits placed at the CBE by some Arab countries stabilized at $15bn, compared to June 2021.
These deposits are distributed as follows: $5.7bn by the United Arab Emirates, $5.3bn by Saudi Arabia, and $4bn by Kuwait.
Rescheduled bilateral debt reached around $1.4bn, down by $550.3m. Short-term debt increased by about $12.7m to about $26.4bn or 16.7% of total external debt. Its ratio to net international reserves increased to 71.3% in March 2022 from 33.8% in June 2021.
This increase was mainly in currency and deposits, as short-term deposits of some Arab countries placed at the Central Bank of Egypt registered about $13bn ($5bn of which were from each of the UAE and Saudi Arabia, and $3.0bn from Qatar); in addition to the currency swap agreement between the central banks of China and Egypt amounting to $2.8bn in March 2022.
Breakdown by Currency
Measuring currency composition of Egypt’s external debt is an important indicator that sheds light on the external debt exposure to currency markets’ volatility. Currency composition of the debt indicates that the US dollar is the main borrowing currency ($103.1bn) in March 2022
Other major currencies recorded $54.7bn, distributed as follows: SDR was the runner-up ($24.8bn), followed by the euro ($17.2bn), the Kuwaiti dinar ($3.9bn), the Chinese yuan ($3.7bn), the Japanese yen ($3.1bn), and other currencies ($2bn).
Breakdown by Creditor
Debt distribution by the creditor indicates that $52.0bn was owed to multilateral institutions.
The IMF loans alone represent 44.7% of these institutions’ loans or about $23.3bn classified as follows: $11.3bn representing Extended Fund Facility (EFF), $2.8bn representing Rapid Financing Instrument (RFI), $5.2bn representing Standby Arrangement (SBA), and $4.0bn representing SDR allocation.
The other major multilateral creditors came next, namely the IBRD ($11.8bn or 22.7%), EIB ($4.7bn or 9.1%), AFREXIM bank ($3.1bn or 6.0% ), and AfDB ($2.7bn or 5.2%).
Additionally, $39.6bn was owed to Arab countries mainly; UAE (11.4% of total external debt), Saudi Arabia (7.8%), and Kuwait (3.8%). Meanwhile, $9.5bn came from five members of Paris Club countries, namely; Japan ($2.8bn), Germany ($2.7bn), the UK ($1.9bn), France ($1.8bn), and USA ($0.3bn). In addition, $7.6bn was owed to China.
Breakdown by Debtor Sector
The structure of Egypt’s external debt by debtor sector in March 2022 reveals that:
The Central Bank’s external debt increased by about $16.3bn to $41.9bn in March 2022 compared to end of June 2021; representing 26.5% of external debt.
Most of this increase came prominent during January/March 2022 (about $14.1bn) as short-term debt hiked by $13.0bn mainly in the form of Arab countries’ deposits, in addition to the increase of long-term debt by $1.1bn from multilateral institutions and the UAE.
Government remains the main obligor, with a share of around 52.7% of external debt. Its debt rose by about $726.1m, reaching $83.2bn.
This increase has been limited by the decrease of government debt in March 2022 compared to December 2021 by about $2.3bn as a result of the repayment of a maturing Eurobond issued in $with a $2bn nominal value during Jan./March 2022.
Banks’ external debt increased by about $3bn to $17.4bn. On the other hand, the other sectors’ debt decreased by $114.4m to $15.3bn.
External Debt Service
Debt service reached $20.0bn (principal repayments registered $16.6bn, and interest payments $3.4bn) through July/March 2021/22, compared to $10.9bn during July/March 2020/2021. The increase mostly reflects the rise in principal repayments by about $8.8bn especially during 1Q 2021/22, whereas interest payments only increased by about $0.3bn.
External Debt Indicators
As for external debt in terms of international comparison, Egypt’s debt remains within manageable limits.
Based on IMF classification, comparing Egypt’s key debt indicators with those of other regional country groups shows that:
Egypt’s external debt-to-GDP ratio reached 34.6% in December 2021 (compared with an average of 51.8% for Latin America and the Caribbean region and 42.4% for the Middle East and Central Asia region).
Egypt’s short-term external debt to total external debt in March 2022 registered 16.7% (compared with an average of 12.5% for Latin America and the Caribbean region, and 21.3% for the Middle East and Central Asia region).
Egypt’s debt-service coverage ratio registered 38.5% in March 2022 (compared with an average of 41.7% for Latin America and the Caribbean region, and 20.6% for the Middle East and Central Asia region).
However, Egypt’s debt-service coverage ratio when calculated as a ratio to current receipts improves considerably to reach 25.5% in March 2022.