Egypt’s Debt Crisis: Over 50% of Budget Goes to Repayments

Official figures from May 26, 2025, reveal Egypt’s debt servicing now consumes over 50% of public spending, severely limiting funds for healthcare, education, and infrastructure.

Egypt’s external debt reached $152.9 billion in June 2024, equivalent to 40% of GDP, signaling a deepening fiscal crisis. This burden, driven by global economic pressures and domestic challenges, mirrors struggles in other heavily indebted nations.

Egypt secures a historic 3.1% GDP primary surplus, approximately 600 billion Egyptian pounds ($12.5 billion), through improved tax collection and strict spending controls.

However, Suez Canal revenues plummeted 40% in Q1 2025, costing $7 billion due to Houthi attacks disrupting maritime trade. Declining oil income further tightens finances, despite fiscal discipline sustaining essential services without new borrowing.

Since the 2011 Arab Spring, Egypt’s external debt has surged from $55.8 billion in 2016 to $164.5 billion in 2023, fueled by reliance on foreign loans and high interest rates.

A $35 billion UAE investment in Ras El-Hekma in February 2024 reduced debt by $7.4 billion, but $51 billion in short-term repayments due within a year strains reserves.

Egypt Battles Inflation and Debt Amid Global Fiscal Strains

Inflation, hitting 35.7% in February 2024, forces Egyptians to buy food in small quantities, reflecting widespread economic hardship. Other nations face comparable fiscal strain.

Lebanon’s debt service exceeded 60% of public spending before its 2020 default, with $85 billion in debt, or 170% of GDP. Zambia’s debt servicing, at 55% of expenditure, burdens its $13 billion external debt, worsened by a 2020 default.

Sri Lanka, with 52% of spending on debt, defaulted in 2022 on $51 billion in obligations. Ghana’s debt service, at 51%, and Ethiopia’s, at 50%, highlight similar pressures, driven by currency devaluation and commodity reliance.

Egypt counters these challenges with domestic strategies, boosting tax revenue by 32% in 2024/2025 and negotiating extended debt maturities with local creditors. Yet, economic growth, at 3.5% to 4%, lags behind targets, risking long-term stagnation.

The Suez Canal, generating $9.4 billion in 2023, remains vulnerable to global disruptions, while past currency devaluations, including a 48% drop in 2016, have spiked import costs, fueling inflation far above the 8.1% emerging market average.