Egypt is at a critical juncture, facing enormous repayments to international lenders. From the beginning of April through the end of December, Cairo will need to pay debts totaling roughly $38.6 billion. That amount represents only Egypt’s short-term loans—the country’s total external debt reached about $163.9 billion by the end of last year.
1+The Egyptian government built its new budget to reduce dependence on new loans and shrink the existing debt burden. But even if it manages to stick to the new budget, the government will save only one trillion Egyptian pounds—equivalent to just one-eighth of the national debt, or $20 billion.
The budget reform has helped Egypt on the global stage for now. The International Monetary Fund recently reached a preliminary agreement with Cairo and will provide additional financial assistance of more than $1.6 billion. While not a huge sum, for Egypt it’s a breath of fresh air.
1+Despite the international support, the near-term outlook is complicated. Along with the economic assistance, the IMF estimates that conditions during the rest of this year will become harder and more challenging for Egypt. As a result, the fund chose to lower its growth forecast for the country’s current fiscal year slightly—indicating that the road to full and stable economic recovery remains long and filled with obstacles.