Improving Public Debt Management
In the OIC Member Countries
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4.1.5 Arab Republic of Egypt
A) Public Debt DynamicsThe Arab Republic of Egypt has experienced relatively high levels of general government debt
in the last decades. While the government managed to reduce the debt level before the
outbreak of the global financial crisis, general government debt has increased from 66.8% to
87.7% of GDP between 2008 and 2015. The increase in debt is expected to slow down,
bringing the debttoGDP ratio to 88.8% in 2017. Net general government debt amounted to
about 78% of GDP in 2015 (see Figure 413).
Since 2006, Egypt’s budget balance has been negative (see Figure 413). Increasing
expenditures for public wages, interest payments, subsidies and public investments
accompanied by falling tax revenues after the outbreak of the revolution, gave rise to a strong
increase in deficits between 2011 and 2013. In 2013, net borrowing amounted to 13.4% of
GDP because of a revenue shortfall in the petroleum sector and two economic stimulus
programs including public spending for infrastructure and social welfare. Interest payments
are high, amounting to about 6.8% of GDP in 2015. Since 2014, the government has introduced
fiscal consolidation measures to reduce the deficit, such as subsidy cuts, tax reforms and the
reduction of public wages (IMF 2015). Since 2013, Egypt has received support from Saudi
Arabia, the United Arab Emirates and Kuwait to stabilize the economy. Aid came both in kind,
mainly oil shipments, as well as in cash grants and deposits in the Central Bank of Egypt
(Reuters 2015). In August 2016, the Egyptian government, the Central Bank of Egypt and the
IMF reached an agreement on a threeyear Extended Fund Facility (EFF) of about $12 billion.
The EFF supports the government in its economic reform program, including measures to
reduce the budget deficit and general government debt (IMF 2016).