Gov’t halts external borrowing for transport projects unless debt committee approves

The government is moving to halt new external borrowing for transport projects unless the Cabinet’s Public Debt Committee signs off first. The step is meant to curb the sector’s mounting financing obligations and ease the public-debt burden, a government official tells EnterpriseAM.

The trajectory is the reason. Transport-ministry project loans are nearing USD 14 bn, up from USD 12.5 bn a year earlier and on track for USD 18 bn, based on the ministry’s own estimates, the official says. The ministry had been negotiating loans and credit facilities with financiers on its own, letting the sector’s obligations pile up, according to the official.

REMEMBER- Transport was at the center of the debt the state is now cleaning up. As we reported in April, the Finance Ministry is taking equity in indebted state bodies to retire the debt these bodies owe to the ministry — and two transport agencies were among the biggest recipients. The first is the National Authority for Tunnels — which is behind the Cairo monorail and high-speed rail — whose capital injection jumped more than 1,300% to about EGP 19.3 bn. The second is Egyptian National Railways (ENR) — which is engaged in an extensive modernization of several railway lines — whose capital injection jumped more than 950% to roughly EGP 10.5 bn. That cleanup followed the IMF flagging Egypt’s publicly backed debt as a “high risk of sovereign stress,” with sovereign-guaranteed debt at EGP 5.4 tn as of June 2025 — a figure the government has promised to shrink as it targets a debt-to-GDP ratio of 78% by June 2027.

Why it matters: New financing will now be tied to public-debt priorities and to whether a project can generate the revenue to service its own debt, the source says — a shift from ministry-level dealmaking to central control. Transport leaned heavily on borrowing, with EGP 317 bn in local and foreign financing in the just-ended FY 2025/26 budget. The ministry is now turning to local funding, more private-sector partnerships, and long-term sustainable finance instead.

What’s next: The government has begun a full review of transport projects in the investment plan, halting those that haven’t started and reprioritizing by execution rate, feasibility, and available funding. The priority now is finishing the big projects already underway rather than launching new ones that depend on external debt.

GO DEEPER- For a live case of the execution problem, see our recent story on ENR’s c. USD 421 mn World Bank railway-safety loan (RISE): five years in, just under half the money has been disbursed, the lead safety metric hasn’t moved off its 2020 baseline, and the Bank has raised fiduciary risk to “high.”