The Central Bank of Egypt (CBE) revealed that 90% of Egypt’s foreign debts, valued at $101.4bn, are long-term. The value of the short-term debts, due within less than 12 months, amounts to $11.3bn or 10% of the country’s total foreign debt.
In its quarterly report issued at the end of last week outlining the Egyptian economy’s foreign situation, the CBE confirmed that Egypt’s foreign debt levels are within safe limits, according to International Monetary Fund (IMF) standards.
It makes up 33.5% of the country’s gross domestic product (GDP), compared to 48.7% in Latin American and Caribbean countries. It also stands against the 47.5% reported in the Middle East and Central Asia region.
The CBE explained that external debt recorded $112.7bn at the end of December 2019, up by about $4bn from June 2019. This increase is attributed to the $4.3bn rise in net disbursements of loans and facilities, while about half of borrowing currencies depreciated versus the US dollar in this period.
Breakdown by Maturity
By original maturity, external debt reaffirmed its usual pattern of long-term external debt predominance at the end of December 2019. Long-term external debt accounted for $101.4bn or 90.0% of the total external debt, whereas short-term external debt accounted for $11.3bn or 10.0%.
By residual maturity, short-term debt accounted for 25.4% of the total external debt at the end of December 2019, compared to 10.0% classified by original maturity.
Meanwhile, long-term external debt represented 74.6% of the total debt, in comparison to 90.0% by original maturity.
Breakdown by Type
Long-term external debt reached $101.4bn, or 90.0%, of total external debt at the end of December 2019, up by about $3.7bn compared to June 2019. Of this:
• Multilateral institutions’ debt reached about $34.7bn, up by 5.8% compared to June 2019;
• Bonds issued abroad (non-resident holdings) reached about $20.9bn, up by 7.7%.
A new issuance of Eurobonds in US dollars in November 2019 amounted to $2.0bn, which resulted in an increase of the outstanding stock by the same amount compared to September 2019.
Bonds outstanding stocks include:
– About $1.0bn of sovereign notes issued in April 2010 and falling, due in 2020 & 2040.
– About $15.7bn of Eurobonds issued in US dollars: in June 2015 (falling and due in 2025); January and May 2017 (falling and due in 2022/2027/2047); February 2018 (falling due in 2023/2028/2048); February 2019 (falling, due in 2024/2029/2049); and November 2019 (falling, due in 2023/2032/2059).
– About $4.2bn of Eurobonds denominated in Euros, issued in April 2018 and falling due in 2026 & 2030, and April 2019 (falling due in 2025 & 2031).
• Other bilateral debt amounted to about $10.2bn, up by 6.5%.
• Buyers’ & suppliers’ credit reached about $11.4bn increasing by 0.8%.
• Repurchase Agreements (Repo) recorded $3.8bn at end of December 2019.
• Rescheduled bilateral debt reached about $2.8bn, down by 10.4%.
• Long-term deposits that have been placed at the CBE by some Arab countries posted $17.2bn, distributed as follows:
i. $7.5bn for Saudi Arabia;
ii. $5.7bn for the UAE;
iii. $4.0bn for Kuwait.
• Non-guaranteed debt of the private sector registered $0.4bn, decreasing by 11.8%.
Short-term external debt increased by about $0.2bn, to about $11.3bn or 10.0% of total debt. Its ratio to net international reserves decreased to 24.8% at the end of December 2019, against 24.9% at end of June 2019.
Breakdown by currency
Measuring the currency composition of Egypt’s external debt is an important indicator that sheds light on the external debt exposure to currency markets’ volatility.
The currency composition of external debt indicates that the US dollar is the main borrowing currency, with a value of $71.4bn.This includes other outstanding obligations in US dollars to creditors other than the US, such as international institutions. Other important currencies recorded $41.3bn, distributed as follows: Euros at $16.2bn; followed by the Special Drawing Rights at $14.0bn; Chinese yuan at $3.6bn; Kuwaiti dinars at $2.9bn; the Japanese yen at $2.5bn; and other currencies at $2.1bn.
Breakdown by Creditor
Debt distribution by creditor country indicates that $34.7bn was owed to multilateral institution, mainly: the IMF at $13.1bn; the International Bank for Reconstruction and Development (IBRD) at $10.8bn; the European Investment Bank (EIB) at $3.1bn; and the African Development Bank (ADF & AfDB) at $2.9bn.
Another $23.1bn was owed to Arab countries, mainly: Saudi Arabia at 8.2% of total external debt; the UAE at 7.3%;and Kuwait at 4.8%. Meanwhile, $10.6bn came from five members of Paris Club countries, namely: Germany ($3.2bn); Japan ($2.4bn); the UK ($2.2bn); France ($1.6bn); and the US ($1.2bn). In addition, $6.8bn of the total debt was owed to China.
Breakdown by Debtor
The structure of Egypt’s external debt by debtor sector at the end of December 2019 reveals that:
– The general government remains the main debtor, with a share of 54.5% of external debt. Its debt increased by $4.1bn compared to June 2019, reaching $61.4bn.
– The CBE’s external debt decreased by about $0.1bn to $27.9bn.
– The external debt of banks’ working in Egypt decreased by about $0.8bn to $8.7bn.
– Other sectors’ debt increased by about $0.7bn to $14.7bn.
External Debt Service
Debt service reached $6.9bn during July to December of fiscal year (FY) 2019/20, compared to $7.3bn during July to December of FY 2018/19. This decrease was due to the $0.9bn decrease in instalment repayments to $4.9bn, whereas paid interest increased by about $0.5bn to reach $2.0bn.
External Debt Indicators
As for the external debt in terms of international comparison, Egypt’s debt remains within manageable limits. Based on the IMF classification, comparing Egypt’s key debt indicators with those of other regional country groups shows that:
– Egypt’s debt stock to GDP represented 33.5% at the end of December 2019 (48.7% for Latin America and the Caribbean, and 47.5% for Middle East and Central Asia);
– Egypt’s short-term external debt to total external debt at the end of December 2019 represented 10.0% (14.2% for Latin America and the Caribbean, and 21.3% for the Middle East and Central Asia);
– Egypt’s debt-service ratio registered 24.4% during the year ending in December 2019 (46.4% for Latin America and the Caribbean, and 23.1% for Middle East and Central Asia).