Central Bank exposes Egypt’s external debt in Q1 2022

Egypt’s external debt recorded $157.8 billion in March 2022, up about $19.9 billion from June 2021. Despite the 22-year increase in net loan and facility disbursements, $2 billion, the depreciation of the other currencies comprising the foreign debt exchange rate vis-à-vis the US dollar resulted in a $2.3 billion decline in the book value.

Breakdown by maturity

By original maturity, external debt reaffirmed its pattern of predominance of long-term debt in March 2022. Long-term debt represented $131.4 billion or 83.3% of total external debt, while short-term accounted for $26.4 billion or 16.7%.

By residual maturity, short-term debt was approximately $42.2 billion in March 2022. Meanwhile, long-term debt was approximately $115.6 billion.

Breakdown by type

Long-term external debt recorded $131.4 billion (83.3% of total external debt) in March 2022, up about $7.2 billion from end-June 2021; whose :

Buyer and supplier credit reached about $16.6 billion, up $3.8 billion.

The debt of multilateral institutions reached around $52 billion, up $2.1 billion, from June 2021.

Bonds issued abroad (holdings of non-residents) reached $29.4 billion, up $660.9 million.

Bonds outstanding as of March 2022 include: approximately $23.6 billion of Eurobonds issued in US dollars, approximately $4.2 billion of Eurobonds denominated in euros, approximately $737.2 million of green bonds issued in US dollars, approximately $493.1 million of new samurai bonds issued in Japanese yen in March 2022 with a face value of 60 billion yen, approximately $355.4 million of sovereign notes and repurchase (Repo) reached approximately $4.8 billion in March 2022, up $750 million. Other bilateral debt amounted to some $11.4 billion, up $80 million.

Private sector unsecured debt recorded $764.5 million, up $372.6 million. It includes Eurobonds issued by Commercial International Bank in July 2021 with a face value of $100 million.

Long-term deposits placed with the ECB by some Arab countries stabilized at $15 billion, compared to June 2021.

These deposits are broken down as follows: $5.7 billion by the United Arab Emirates, $5.3 billion by Saudi Arabia and $4 billion by Kuwait.

Rescheduled bilateral debt reached approximately $1.4 billion, down $550.3 million. Short-term debt increased by about $12.7 million to about $26.4 billion, or 16.7% of total external debt. Its ratio to net international reserves increased from 33.8% in June 2021 to 71.3% in March 2022.

This increase was mainly in foreign exchange and deposits, with short-term deposits of some Arab countries placed with the Central Bank of Egypt registering around $13 billion (of which $5 billion each came from the United Arab Emirates and the United Arab Emirates). Saudi Arabia and $3.0 billion from Qatar); in addition to the currency swap agreement between the central banks of China and Egypt in the amount of $2.8 billion in March 2022.

Breakdown by currency

Measuring the currency composition of Egypt’s external debt is an important indicator that sheds light on the exposure of external debt to volatility in foreign exchange markets. Currency composition of debt shows US dollar as primary borrowing currency ($103.1 billion) as of March 2022

Other major currencies recorded $54.7 billion, broken down as follows: the SDR was second ($24.8 billion), followed by the euro ($17.2 billion), the Kuwaiti dinar (3 .9 billion), Chinese yuan ($3.7 billion), Japanese yen ($3.1 billion) and other currencies ($2 billion).

Breakdown by creditor

The distribution of debt by creditor indicates that $52.0 billion was owed to multilateral institutions.

IMF loans alone represent 44.7% of the loans of these institutions, i.e. approximately 23.3 billion dollars, distributed as follows: 11.3 billion dollars representing the expanded financing mechanism (EFF), 2.8 billion representing the Rapid Financing Instrument (RFI), $5.2 billion representing the Stand-by Arrangement (SBA), and $4.0 billion representing the SDR allocation.

Next come the other main multilateral creditors, namely the IBRD (11.8 billion dollars or 22.7%), the EIB (4.7 billion dollars or 9.1%), the AFREXIM bank (3.1 billion or 6.0%) and AfDB ($2.7 billion or 5.2%).

In addition, $39.6 billion was owed mainly to Arab countries; United Arab Emirates (11.4% of total external debt), Saudi Arabia (7.8%) and Kuwait (3.8%). Meanwhile, $9.5 billion came from five Paris Club member countries, namely; Japan ($2.8 billion), Germany ($2.7 billion), United Kingdom ($1.9 billion), France ($1.8 billion) and United States ($0.3 billion). of dollars). Additionally, $7.6 billion was owed to China.

Breakdown by debtor sector

The structure of Egypt’s external debt by debtor sector in March 2022 reveals that:

The Central Bank’s external debt increased by about $16.3 billion to $41.9 billion in March 2022 compared to end-June 2021; representing 26.5% of the external debt.

Most of this increase occurred in January/March 2022 (about $14.1 billion) as short-term debt increased by $13.0 billion, mainly in the form of deposits from Arab countries, in plus the increase in long-term debt of $1.1 billion in multilateral debt. institutions and the UAE.

The government remains the main debtor, with a share of around 52.7% of the external debt. Its debt increased by about $726.1 million, reaching $83.2 billion.

This increase was limited by the decrease in public debt in March 2022 compared to December 2021 of approximately $2.3 billion following the redemption of a maturing Eurobond issued in dollars worth face value of $2 billion in January/March 2022.

Banks’ external debt increased by about $3 billion to $17.4 billion. On the other hand, the debt of the other sectors fell from $114.4 million to $15.3 billion.

External debt service

Debt service reached $20.0 billion (principal repayments reached $16.6 billion and interest payments $3.4 billion) through July/March 2021/22, compared to $10.9 billion in July/March 2020/2021. The increase mainly reflects higher principal repayments of approximately $8.8 billion, particularly during the first quarter of 2021/22, while interest payments only increased by approximately 0, $3 billion.

External debt indicators

As for external debt in terms of international comparison, Egypt’s debt remains within manageable limits.

Based on the IMF classification, comparing Egypt’s main debt indicators with those of other regional country groups shows that:

Egypt’s external debt-to-GDP ratio reached 34.6% in December 2021 (compared to an average of 51.8% for the Latin America and Caribbean region and 42.4% for the Middle East and Central Asia region ).

Egypt’s short-term external debt relative to total external debt in March 2022 stood at 16.7% (compared to an average of 12.5% ​​for the Latin America and Caribbean region and 21.3% for the Middle East and Central Asia region).

Egypt’s debt service coverage ratio reached 38.5% in March 2022 (compared to an average of 41.7% for the Latin America and Caribbean region and 20.6% for the Middle East region and Central Asia).

However, Egypt’s debt service coverage ratio, when calculated as a current revenue ratio, improves significantly to reach 25.5% in March 2022.

Shirlene J. Manley