Ahmed Kamel – Egypt Daily News
Former Egyptian Finance Minister and international economic expert Youssef Boutros-Ghali has strongly rejected proposals circulating in public debate that suggest settling government debt through the transfer of state-owned assets or by pledging revenues from strategic national assets such as the Suez Canal. He argued that such ideas lack sound economic logic and reflect a fundamental misunderstanding of public debt, liquidity, and how modern financial systems operate.
Boutros-Ghali stressed that countries are not managed through “clever-sounding shortcuts,” warning that major economic crises are never resolved through unconventional or improvised solutions. Instead, he emphasized that time-tested economic policies remain the only viable path to sustainable recovery.
At the core of his argument, Boutros-Ghali explained that government debt essentially represents depositors’ money held by banks. He questioned how such obligations could realistically be repaid through illiquid assets, asking rhetorically whether depositors demanding their savings could be handed shares in a garment factory or ownership stakes in non-tradable public assets.
According to the former minister, proposals to swap debt for assets ignore the central role of liquidity in the banking system and risk triggering deeper financial instability rather than resolving existing pressures. He warned that such approaches could undermine confidence in both public finances and the banking sector.
Boutros-Ghali dismissed the notion of “miracle solutions” to Egypt’s economic challenges, arguing that the reform roadmap has been well understood for decades. He said the only durable solution lies in accelerating real economic growth, attracting domestic and foreign investment, controlling inflation, and restoring fiscal and financial stability.
To illustrate his point, he offered a simple analogy: if an individual earns 500 pounds and owes 1,000 pounds, they are in crisis; but if their income rises to one million pounds, the debt becomes manageable. The true solution, he argued, lies in expanding the size of the economy rather than attempting to reshuffle or repackage debt.
Addressing suggestions that Egypt could issue international bonds backed by the Suez Canal to raise as much as $100 billion, Boutros-Ghali described the idea as unrealistic and dangerous. He noted that annual revenues from the canal typically range between $5 billion and $7 billion and can fall sharply, or even to zero, during periods of regional instability. By contrast, Egypt’s external debt service alone requires annual interest payments of approximately $8 billion to $9 billion, making any reliance on canal revenues insufficient and highly risky.
He further warned that pledging Suez Canal revenues would immediately create a significant gap in the state budget, as those revenues are a key source of funding for public spending, including education, healthcare, and debt servicing. Losing access to this sovereign income stream, he said, would force the government to seek alternative financing options that are likely to be more expensive and socially painful.
Despite his criticism of certain proposals, Boutros-Ghali offered measured praise for the current finance minister, noting that efforts to reform the mechanisms of implementation, rather than focusing solely on changing laws, represent a more intelligent and effective approach to structural reform. He argued that Egypt’s economic challenges have historically stemmed less from legislative shortcomings and more from weaknesses in execution.
In closing, Boutros-Ghali used a striking metaphor to summarize his message, comparing those waiting for a magical economic solution to a student entering an exam without studying and hoping for divine inspiration. Economic solutions, he concluded, are well known; the real challenge lies in applying them in a way that minimizes harm to the country’s most vulnerable social groups while restoring long-term stability and growth.
