How will Egypt’s debt be affected by a decline in the value of the dollar to 38 pounds?

Standard Chartered Bank said almost a third of Egypt’s debt is in foreign currency and any additional move in the US dollar against the Egyptian pound would boost the debt-to-GDP ratio.

And the bank stated in a report that Masravi received a copy entitled (Egypt, the clock is ticking) that raising the value of the dollar to about 38 pounds (as it circulates in a parallel market) would increase the debt to gross domestic product ratio to over 100% to end of the year, June 2023

Egypt’s external debt increased by 5.2% in the last quarter of last year to reach $162.9 billion at the end of December, compared to $154.9 billion in September, according to data released by the Ministry of Planning and Economic Development.

According to the bank’s report, the debt burden reached 91.6% of GDP in June 2022 (according to the International Monetary Fund).

According to the State’s New Fiscal Year General Budget Proposal Financial Statement, public agency debt is expected to rise to approximately 96% of GDP by the end of June 2023.

Egypt’s return to a flexible exchange rate after it was suspended in 2020 and 2021 has sent the pound sterling down significantly since March last year, pushing the dollar up about 96% against the pound. from £15.76 on March 20, 2022 to £30.94 in bank transactions Today, Sunday, according to central bank data.

Standard Chartered said the combination of high inflation, weak currency and global interest rate hikes has had a major impact on Egypt as the interest expense-to-income ratio is likely to exceed 50% in the current and next fiscal years. Report.

Standard Chartered Bank said in a report that despite fiscal discipline keeping the deficit under control, Egypt’s debt sustainability problems are on the rise.

Source: Masravi