Cairo, Egypt - Egyptian Prime Minister Mostafa Madbouly has reiterated the government's commitment to fulfilling its financial obligations, emphasizing that the country has never defaulted on its debts. While acknowledging the challenges posed by repaying significant debts, Madbouly stated that the debt due in the coming year will be lower than the amount repaid in 2024.
According to the International Monetary Fund (IMF), Egypt's overall debt has declined, dropping to 89 percent of GDP in the 2023/2024 fiscal year, down from 95.7 percent in the previous year. The government aims to further reduce the external debt-to-GDP ratio to around 88 percent in FY2024/2025 and ultimately to below 80 percent by FY2026/2027, a key condition of its $8 billion loan program with the IMF, scheduled to conclude in September 2026.
Addressing Export Arrears
In a separate development, the Egyptian cabinet approved a new mechanism for settling overdue payments owed to exporting companies by the Export Development Fund. This move, in line with directives from President Abdel-Fattah El-Sisi, aims to resolve outstanding arrears that have been a concern for exporters.
Since 2019, the government has disbursed nearly EGP 70 billion to around 2,500 exporting companies to address these arrears. The new mechanism, designed to settle the remaining EGP 60 billion, offers flexibility by allowing companies to choose from various payment options based on their individual financial situations. The initial phase will focus on settling between 40 and 50 percent of the total overdue amount.
Impact and Outlook
The government's commitment to debt repayment and the new export arrears settlement mechanism are crucial steps towards strengthening Egypt's economic stability. Reducing debt levels and improving the financial health of exporters are expected to enhance the competitiveness of the Egyptian export sector and boost overall economic growth.
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