Egypt’s debt levels will continue trending down on FY2021/2022 draft budget targets, WB

Egypt’s elevated debt levels will  be put on a downturn path on the back of its FY2021/2022 draft budget targets, particularly its initial surplus expectations according to the World Bank’s practice manager for macroeconomics in MENA Kevin Carey during a virtual event .

The debts level will decline despite a temporary pause to the government’s debt reduction strategy during the pandemic, as authorities sought to address the growing health and education spending needs, said Carey according to Ahram online .

The government’s debt strategy, which was outlined a year before the pandemic hit, seeks to bring down debt to 80% of GDP by 2022, primarily through moving toward longer-term borrowing. According to Finance Ministry figures, debt-to-GDP stood at 86.1 percent at the end of the FY2019-2020, but the World Bank put the ratio a notch higher at 87.5 percent.

Egypt is one of the MENA countries less vulnerable to a debt crisis. Many MENA countries entered the pandemic with already-high debt stocks, weak output growth, and weak governance especially when it comes to policy transparency. While some of that may apply to Egypt, the country was among only three others that grew during the peak of the pandemic’s effect on the global economy. “Increasing economic output remains the most sustainable way to reduce debt,” the bank says.