Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Egypt's National Debt Falls to Lowest Level in 10 Yrs


Mon 24 Feb 2020 | 06:08 AM
Taarek Refaat

The economic reform plan adopted by Egypt proves success day after day, which appears in many positive indicators that reflect the boom in the economy in an effort to meet the aspirations and hopes of the Egyptian citizen.

Among the most important of these indicators is the decline of national debt as a percentage of the Gross Domestic Product (GDP), reaching its lowest level in 10 years, according to an infographic published by the Cabinet's Media Center.

On Sunday, the Cabinet issued infographics indicating that the domestic debt recorded 66.7% as a percentage of GDP until the first quarter of FY 2019/20.

The debt, according to the infograph, recorded its highest level in FY 2016/17 at 94.5% of GDP, before it started its downward trend with the start of the implementation of the economic reform program to record 82.2% in FY 2017/18, and FY 71.9% % In 2018/19.

The rates of the national debt as a percentage of GDP recorded 63.8% in 2009/10, 68% in 2010/11, 66.9% in 2011/12, 75.7% in 2012/13, and 77. 7% in 2013/14, 81.5% in 2014/15, and 91.5% in 2015/16.

Data indicated that the conditions surrounding the decline in the government's debt included a low interest rate that recorded 12.25% on deposits, 13.25% on lending at the end of 2019, compared to 16.75% on deposits, and 17.75% on lending at the end of 2018 , 18.75% on deposits, 19.75% on lending in 2017, and 14.75% on deposit, and 15.75% on lending in 2016.

The infograph shows that this decrease also comes against the background of the decrease in the annual average rate of inflation, which recorded 9.2% in 2019, compared to 14.4% in 2018, 29.5% in 2017, and 13.8% in 2016.

Meantime, the economic reform program led to the increase in the volume of GDP, recording EGP 5.2 trillion in 2018/19, compared to EGP 4.3 trillion in 2017/18, and EGP 3.4 trillion in 2016/17, And EGP 2.7 trillion in 2015/16, along with a decrease in the budget deficit as a percentage of GDP to record 8.2% in 2018/19, compared to 9.7% in 2017/18, and 10.9% in 2016/17, and it is intended to reach 7.2% in the 2019/20 budget.

Moreover, the International Monetary Monetary Fund (IMF) stressed that the government's intention to maintain a first surplus within the limits of 2% of GDP in the medium term will ensure a steady decline in public debt, bringing it to sustainable levels.

While the World Bank (WB) indicated that the decrease in the country's net debt, during the previous fiscal year, is due to the decrease in the public debt.

For its part, Fitch Solutions, explained that the stability of public debt service is driving their positive outlook for the country during the current and next fiscal year.

In the same context, Morgan Stanley Financial and Investment Services indicated that the government's measures to cut subsidies have contributed to reducing public debt rates as a percentage of GDP during 2018/19 compared to 2016/17, while Bloomberg indicated that Egypt targets low revenues on domestic debt in the current fiscal year, adding that it expects securities to remain reliable among investors.

While Global Capital indicated that Egypt won the award for the best public debt management unit in the Middle East and North Africa (MENA) for the year 2019.