2024 is going to be an expensive year: New central bank projections out last week estimate that we’re going to have to repay almost a fifth of our total external debt obligations in 2024 alone.

How do we manage it all? Economist Hany Geneina floats the possibility of the IMF more than doubling our USD 3 bn assistance program should we deliver on our commitments, providing a vital line of FX that would enable us to narrow our significant external financing gap.

Here’s how it could all play out:

A big year of repayments ahead: Egypt will likely have to spend USD 29.2 bn on debt repayments in 2024, according to updated central bank estimates (pdf) published last week.

The need-to-knows:

  • It’s significantly more than we’re paying this year: This is USD 10 bn more than our expected debt servicing bill for this year, which the central bank now puts at USD 19.3 bn, and is almost a fifth of our total external debt.
  • It’s more than USD 1 bn more than we had previously expected: The central bank in Juneestimated that we will repay around USD 28 bn over the 12-month period.
  • It’s mostly due to higher interest rates: The central bank now projects Egypt will have to repay USD 6.3 bn in interest next year, USD 841 mn more than its previous estimate in June.

Remember: Egypt’s external debt has quadrupled over the past decade, reaching a record high of USD 165.4 bn at the end of March due to increased borrowing from multilateral lenders and international debt markets. This equates to around 38.5% of GDP, below the IMF’s 50% threshold for manageable debt levels, according to the report. More than two-thirds of the country’s external debt is denominated in USD.

We’ll be paying significantly more over the longer term, too: Egypt’s debt repayments between 2024 and 2027 now stand at USD 83.7 bn, according to the central bank. That’s USD 6.4 bn more than it had estimated in June.

Background: Our external position has come under pressure in recent months on the back of higher interest rates, turmoil in the financial markets, and a shortage of foreign currency. The EGP has lost more than half of its value against the USD since March 2022 in a series of devaluations aimed at easing FX liquidity stress.

The financing gap: Goldman Sachs estimates that Egypt is facing a financing gap of more than USD 11 bn over the next five years, which it is trying to fill via a mixture of state asset sales, new concessional financing from multilateral lenders, higher tourism and export revenues, and most recently via currency swap agreements. Authorities are also in negotiations with the IMF regarding the completion of the first and second reviews of the USD 3 bn assistance program, which should release almost USD 700 mn.

How we could potentially fund it: “It’s expected that we receive debt inflows totalling USD 6-7 bn, proceeds from the potential panda and samurai bond sales worth a combined USD 1 bn, the second and third tranches of the IMF loan along with USD 1.2 bn under the IMF’s Resilience and Sustainability Facility, as well as more than USD 5 bn from state asset sales,” economic analyst Hany Geneina told Enterprise yesterday.

The IMF could bump up our loan if we deliver: “It’s expected that the IMF loan gets upsized to USD 6-8 bn, up from USD 3 bn, following the much expected front-loaded reforms early next year — including lifting energy subsidies, an aggressive rate hike that could exceed 300 bps, and a decision to float the EGP,” Geneina told us. The potential bump would also be in line with the fact that we have a debt repayment worth USD 5.1 bn to the IMF next year, surpassing the amount of the current USD 3 bn arrangement, Geneina added.

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