The Central Bank of Egypt (CBE) has reported an increase of $9.6bn in external debt from June 2022 to March 2023, reaching $165.3bn. The CBE attributed this rise to the net disbursements of loans and facilities by $9.1bn, as well as the depreciation of the US dollar exchange rate vis-à-vis other currencies of Egypt’s external debt, which led to an increase of $514.7m in book value.
Breakdown by Maturity
According to the CBE, by original maturity, the external debt consists mainly of long-term debt, which accounted for $136.4bn or 82.5% of the total debt in March 2023, while short-term debt accounted for $28.9bn.
By residual maturity, short-term debt amounted to about $47.5bn in March 2023. Meanwhile, long-term debt reached about $117.9bn.
Breakdown by Type
Long-term external debt registered $136.4bn (82.5% of total external debt) in March 2023, up by about $7.3bn compared to June 2022. This is illustrated in the following:
Buyers’ and suppliers’ credit reached about $19.1bn, up by $2.7bn in March 2023, compared with the end of June 2022.
Multilateral institutions’ debt reached about $52.7bn, up by $1.4bn as compared to June 2022.
Repurchase Agreements (Repo) registered about $5.5bn.
Non-guaranteed private sector debt reached $1.6bn, up by $769.6m. This rise, which was realized mainly during the period January/March 2023, resulted from a loan of about $750.0m granted to a private bank by its headquarters and another one of $10.0m from a multilateral institution. It is worth noting that this outstanding stock includes the Green bonds, issued by the Commercial International Bank in July 2021, with a nominal value of $100m.
Other bilateral debt 1 amounted to some $11.8bn, up by $689.0m.
Bonds issued abroad (non-resident holdings) reached $29.6bn, up by $593.9m. This increase came as a dual effect of the new issuance of SUKUK at a value of $1.5bn, and the redemption of Eurobonds issued in US dollars (a trench at a value of) $0.9bn during Jan/March 2023.
The outstanding stock of bonds as of March 2023 includes the following: Roughly $22.5bn of Eurobonds issued in US dollars, the equivalent of about $4.1bn of Eurobonds denominated in euro, about $1.5bn of SUKUK issued in US dollars in February 2023.
About $737.2m of Green bonds were issued in US dollars, the equivalent of about $451.9m of Samurai bonds issued in Japanese yen, and about $355.4m of sovereign notes issued in US dollars.
Long-term deposits placed at the CBE by some Arab countries registered about $15bn.
These deposits are distributed as follows: $5.7bn by the United Arab Emirates $5.3bn by Saudi Arabia $4bn by Kuwait.
Rescheduled bilateral debt reached around $1.1bn, down by $242.8m.
Short-term debt increased by about $2.3bn compared to June 2022 to reach about $28.9bn in March 2023, or 17.5% of total external debt.
Newly placed Arab countries’ deposits at the CBE constitute more than half of the short-term debt stock in March 2023, registering $14.9bn. Add to this $2.6bn representing the Chinese Currency Swap Agreement between the CBE and the People’s Bank of China, and $1bn representing the AFREXIM Bank loan.
Breakdown by Currency
Measuring the currency composition of Egypt’s external debt is an important indicator that sheds light on the external debt exposure to currency markets’ volatility. The currency composition of external debt reveals that the US dollar is the main borrowing currency ($113bn, or 68.4%) in March 2023. Other major currencies recorded $52.3bn, distributed as follows: SDR was the runner-up ($23bn), followed by the euro ($17.3bn), the Kuwaiti dinar ($3.9bn), the Chinese yuan ($3.3bn), the Japanese yen ($2.8bn), and other currencies ($2bn).
Breakdown by Creditor
Debt distribution by creditors indicates that $52.7bn was owed to multilateral institutions2. The IMF loans alone represent 41.5% of these institutions’ loans, or the equivalent of $21.9bn, which were classified as follows $9.9bn in Extended Fund Facility (EFF) $2.7bn in Rapid Financing Instrument (RFI) $5.1bn in Stand-by Arrangement (SBA) $3.8bn representing SDR allocation3 $351.4m representing the first tranche of the new Extended Fund Facility.
The other major multilateral creditors, which came next are the IBRD ($12bn or 22.8%), EIB ($4.7bn or 8.8%), AFREXIM bank ($4.2bn or 8.0%), AfDB ($2.6bn or 5.0%), and Arab Fund for Economic and Social Development ($2.2bn or 4.2%).
Additionally, $46.1bn was owed to Arab countries mainly; UAE (12.7% of total external debt), Saudi Arabia (7.6%), Kuwait (4.3%), and Qatar (2.5%).
Meanwhile, $9.4bn came from five members of Paris Club countries, namely; Germany and Japan ($2.6bn each), France ($2.1bn), the UK ($1.3bn), and the USA ($0.8bn). In addition, $8.2bn was owed to China.
Breakdown by Debtor Sector
The structure of Egypt’s external debt by debtor sector in March 2023 compared to June 2022 reveals that:
Banks’ external debt increased by about $3.4bn to $21.1bn, representing 12.8% of external debt. Most of this change is the result of the increase in net flows of long-term loans received by banks.
The Central Bank’s external debt increased by about $2.9bn to $43.8bn, representing 26.5% of external debt.
Other sectors’ debt increased by about $2.2bn to $17bn, representing 10.3% of external debt.
The government remains the main obligor, with a share of around 50.4% of external debt. Its debt increased by about $1.1bn, reaching $83.4bn. Worth noting, the government has issued $1.5bn of sukuk in international markets during Jan/ March 2023.
External Debt Service
Debt service retreated to $17.8bn (principal repayments registered $12.8bn, and interest payments $5bn) in July/March 2022/2023, compared with $20bn in July/March 2021/2022. This decrease in debt service reflects the reduction in principal repayments by about $3.8bn, and the increase in interest payments by about $1.6bn.
External Debt Indicators
External debt stock to GDP represented 38.5% in March 2023 compared with 32.6% in June 2022, well below the IMF’s external debt sustainability threshold (50%).
Short-term external debt by original maturity to total external debt registered 17.5% in March 2023 (against 17.1% in June 2022).
Its ratio to net international reserves increased to 84.0% in March 2023 from 79.7% in June 2022.
Short-term external debt by residual maturity to total external debt registered 28.7% in March 2023 (against 27.1% in June 2022).
Its ratio to net international reserves increased to 137.9% in March 2023 (against 126.4% in June 2022).
External debt stock to exports of goods and services registered 221.4% in March 2023 (against 219.8% in June 2022).
Debt-service ratio2 reached 32.2% in March 2023 compared to 37.1% in June 2022. However, the debt-service ratio when calculated as a ratio to current receipts3 improves considerably to reach 23.5% in March 2023 compared to 25.2% in June 2022.