Prime Minister: Egypt Within Safe Debt Limits, New Loans Allocated for Needs

Madbouly confirms Egypt is within safe debt limits and explains new loan policy.

SUMMARY

Prime Minister Mostafa Madbouly confirms that Egypt is within safe public debt limits and outlines government plans to reduce debt to 40% of GDP, focusing on loans allocated for essential needs and replacing old debt with new debt at lower interest rates.

KEY HIGHLIGHTS

Egypt was within safe debt limits at 44% last year.
Agreement to reduce debt ratio to 40% in the new fiscal year.
New loans are allocated for essential needs such as petroleum products and food.
Replacing old debt with new debt to extend external debt maturity without increasing total debt value.

CORE SUBJECT

Fiscal policy and public debt reduction in Egypt

Dr. Mostafa Madbouly, Prime Minister, stated that the main focus of the economic group currently is to work on reducing debt in the upcoming period. He added during a press conference today, Wednesday, that this target includes the total public debt, whether domestic or foreign, explaining that the safe debt limits in middle-income countries, which Egypt is classified among, range between 40% and 45% of GDP. He mentioned that the ratio in Egypt last year was 44%, meaning that Egypt is within the safe debt limits. He confirmed that discussions are ongoing regarding debt targets for the new year, clarifying that the agreed target is to reach 40%, which means lowering to the lowest figure among the indicators set by international institutions. Madbouly added that he has asked the economic group to work on reducing the ratio below 40% alongside the significant economic growth currently being achieved and the expected growth rate of 5%, in addition to monetary stability and the availability of foreign currency. He emphasized that the state follows governance in adding new loans, clarifying that new loans are allocated for the state's essential needs, whether providing petroleum products or food. He explained that the state sometimes resorts to replacing one debt with another, giving the example of having a debt that is due for repayment with a high interest rate, which is then replaced with another debt, allowing the extension of the external debt term for a longer period. He clarified that this does not lead to an increase in the total debt value, confirming the agreement on a ceiling for external debt so that by the end of the current fiscal year, it will reach 40% of the total domestic debt.

KEYWORDS

public debt Egypt economy new loans gross domestic product

MENTIONED ENTITIES 3

Mostafa Madbouly

👤 Person_Male

Prime Minister of Egypt

Economic Group

🏛️ Organization

Government group concerned with economic affairs in Egypt

Egypt

📍 Location_Country

Country located in North Africa