By Hend El-Behary
Egypt is the third most indebted country in the world, according to the Economist magazine. Egyptian public debt currently stands at US$206.999 billion, which amounts to 82 per cent of GDP. The current economic status could drive Egypt into full financial crisis, the magazine reported.
Spain and Greece were the first equal most indebted nations according to the survey. Egypt and Israel ranked third equal, with the latter owing US$172.260 billion. Iran came in fifth place with a debt of $64.860 billion, while Syria and Tunisia ranked sixth with debt exceeding $20 billion.
The Economist predicts that with rising public debt, Egypt will resort to higher taxes and imposing austerity measures across the board.
“It’s a very dangerous indicator,” financial expert Magdy Tolba told Daily News Egypt. “It is attributed to the chronic deficit in Egypt’s general budget, the increase in borrowing, along withthe structural crises caused by strikes in major companies.”
Egypt has received a number of large international loans since the 25 January revolution. “If we’re granted the $4.8 billion from the International Monetary Fund (IMF), we’ll see a surge in the budget deficit,” said Toulba.
Toulba added that loan interest amounts to 22 per cent of the entire state budget, which deprives other sectors such as education, healthcare and other social services from their fair share of the budget.
“Imposing higher taxes, raising prices of consumer products and decreasing subsidies for industries are ways by which Egypt can avoid the crisis,” Toulba said. He added, “Egypt is strong enough to overcome the current state, but we need to work on diversifying our sources of income, make the best use out the Suez Canal, create new investment prospects to steer a away from the debt crisis.”