On Wednesday, the Central Agency for Public Mobilisation and Statistics (CAPMAS) announced that Egypt’s government debt service has risen to EGP 406.2 bln. This is an increase of EGP 45.5 bln from 2016/17, which saw a government debt service of EGP 370.7 bln. The government debt service is the payment required of the government to pay off its debt for a particular period. As a consequence, why has the government’s debt service increased so dramatically? The most likely answer is that the government issued new bonds locally, to fund projects of its own, at higher interest rates. Additionally, when the government made the eurobond sale back in February, it issued new bonds to be paid in foreign currency. Thus, the majority of this increase in the government debt service can be attributed to the new issuance of bonds made at higher interest rates both locally and abroad. Sure enough, the interest on domestic and international loans increased from EGP 159.2 billion in 2016/17 to EGP 247 billion in 2017/18. Why is the government issuing so many bonds to raise capital? The simple answer is that the government needs to raise…
What Does the Egyptian Government Debt Service Rising to EGP 406.2 bln Mean?
August 2, 2018
