Egypt’s long-term external debt increased to $90.6 bln in 2019: World Bank

Al Ahram - 

gypt’s long-term external debt increased in 2019 to $90.6 billion - up from the $80.6 billion recorded in 2018 - with $90.3 billion of this debt acquired by the public sector, according to the World Bank’s international dept statistics report 2021. According to the report, which was released on Monday amid the International Monetary Fund and the World Bank annual meetings, Egypt’s short-term external debt also rose to $11.2 billion in 2019, up from $10.3 billion in 2018.

Egypt’s disbursements over the long term fell to $13.3 billion, down from $20.2 billion in 2018, with $15.2 billion constituted by the public sector, as stated in the report. For the Middle East and North Africa (MENA) the report disclosed that the region’s external debt jumped to $340 billion in 2019 up from $323 billion in 2018, making it the highest since 2009.   

Moreover, the debt burden of the least developed countries continues to climb, recording $744 billion in 2019. The report also unveiled that net financial - including debt and equity - flows to low- and middle-income countries decreased to $0.9 trillion in 2019, 14 per cent below the 2018 level while registering the second consecutive year of decline.

On the other hand, net debt inflows dropped 28 per cent to $383 billion in 2019, down from $532 billion in 2018. In contrast, foreign direct investment (FDI) inflows reached $479 billion in 2019, remaining around 2018 levels. Meanwhile, portfolio equity inflow increased 23 per cent to reach $48 billion in 2019, according to the report.

Net financial flows to countries eligible for the debt service suspension initiative (DSSI) rose 16 per cent in 2019 to record $103 billion, a record high for the decade and much faster than those to other low- and middle-income countries, added the report. The report also said that the increase in net financial flows was the outcome of a ten per cent rise in net debt inflows that reached $66 billion in 2019, up from $60 billion in 2018 and a 36 per cent rise in FDI.

According to the report, long-term external debt was the fastest-growing component - which rose seven per cent to reach $6 trillion - equivalent to 73 per cent of total external debt stock. Meanwhile, short-term external debt stocks rose marginally by1.5 per cent to reach $2.2 trillion at end-2019. Net debt inflows recorded $383 billion in 2019, 28 per cent below the 2018 level and less than half the comparable inflows in 2017.

Further, short-term debt inflows dropped 86 per cent to reach $30 billion - down from $219 billion in 2018 - following an outflow of short-term debt from China (–$14 billion) in 2019, compared to an inflow of $188 billion in 2018. The report assured that achieving long-term debt sustainability will depend on a large scale shift in the world’s approach to debt transparency.

“These trends suggest that future sovereign debt restructurings will be more complex for many of the poorest countries," said President of the World Bank David Malpass. "For most International Development Association borrowers, private creditors account for a relatively small share of the countries’ external public debt. However, they account for a significant share in several countries," he added.