Egypt’s short-term dollar-denominated debt fell $3.25 billion to about $14 billion by the end of 2018, Deputy Finance Minister Ahmed Kouchouk said on Sunday.
The Deputy Finance Minister stated in a press release, which Asharq Al-Awsat received a copy of, Egypt has borrowed heavily from abroad after adopting a three-year economic reform program backed by the International Monetary Fund (IMF) since late 2016.
He explained that the ministry has successfully managed long-term borrowing from international markets and used part of these funds to repay short-term foreign debt.
“We succeeded in borrowing a long term from international markets and using part of those funds to pay off short-term foreign debt,” added Kouchouk.
Egypt's foreign debt has surged strongly in recent years, from $46 billion in 2014 to $92.6 billion in 2018.
The ratio of short-term foreign debt to total external debt has almost doubled from 7.9 percent to 15.5 percent between 2014 and 2017, and fell slightly in 2018 to 13.3 percent.
Short-term foreign debts strained Egypt's financial situation as it approached 2016 to half the value of foreign exchange reserves at 40 percent, but it has fallen to 27.8 percent in 2018.
Egypt faces a difficult repayment schedule for the next two years, and it is trying to increase its investor base, extend its debt payment plan with less interest.
Egypt is considering issuing sukuk bonds worth $1.5 billion in the fiscal year 2019-2020, a government official told Enterprise Finance.
This will be the first offering of its kind in Egypt and will test investors' willingness to invest in the Egyptian market.
Enterprise says the Egyptian government is optimistic about the sukuk market and expects to rely on it as an alternative source of financing.
The Egyptian finance ministry is likely to start a tour of Asia this month to promote new bond offerings, with plans to gain $3 billion to $7 billion in the dollar and euro bonds.
The Ministry has put in place a debt control plan aimed at reducing the public debt ratio to 72-75 percent by 2021-2022 compared to the current 98 percent, the source told Enterprise.
Government interest expenditure from GDP increased from 7.9 percent in 2014-2015 to 10 percent in 2017-2018, based on the financial statement for the current budget. It also predicted that the interest rate would roughly remain the same level of 10.3 percent during the current fiscal year.
IMF executive board will hold the fourth review of Egypt’s $12 billion loan program.
Egypt received a three-year, $12-billion-dollar loan from the IMF, part of a $21 billion package to build the country’s foreign-exchange reserves and fix its balance of payments.
The government aims to restore investor confidence after years of instability.
This installment of the loan was supposed to be disbursed in December but was postponed due to disagreements with the IMF over the timing of introducing alterations on the government's fuel pricing mechanism.
Egypt’s Central Bank governor, Tarek Amer, told Bloomberg that Egypt is due to receive the fifth installment of the Fund’s loan in late January or early February.
IMF Managing Director Christine Lagarde said earlier that she will recommend that the Fund’s executive board approve a review of Egypt’s loan program.
She commended Egyptian authorities for reforms that have put the country’s budget deficit on a declining trajectory, and that have helped to reduce its unemployment rate.
