Egypt Gains Room For Manoeuvre But Vulnerability To External Shocks Remains

Nevertheless, under a worsened macro-fiscal scenario, reflecting Egypt’s record of uneven progress on reforms and high vulnerability to external shocks, we project government debt could instead peak around 105% of GDP this year and remain above 90% through 2029.

Still, the government’s interest burden remains a significant credit-rating constraint given the high public debt stock. While interest payments are set to decline in coming years, they will still account for almost half of revenues on average in the period up to 2029, from 40% in 2023, and for about one third of revenues even by 2029. This reflects the low revenue mobilisation as well as the relatively short average term to maturity of public debt, standing at 3.4 years in June this year. Egypt’s high interest burden will thus remain one of its main credit challenges.