The Egyptian government has announced its intention to repay substantial amounts to its creditors by the end of 2023. Egypt is set to repay $240 million to the International Monetary Fund (IMF) in September of the upcoming year. This payment is part of the credit arrangement agreement valued at $5 billion that was established in 2020. According to IMF data, Egypt will also make payments of approximately $1.45 billion during the months of November and December.
The upcoming payments in November include $333 million in interest on borrowed Special Drawing Rights (SDRs), around $217.9 million to repay a tranche of the Extended Fund Facility agreement that Egypt entered into in 2016, amounting to $12 billion. Additionally, Egypt will allocate $338 million to repay a portion of the $2.7 billion Emergency Financing Program that was initiated during the COVID-19 pandemic.
Simultaneously, Egypt is obligated to repay two tranches of the Extended Fund Facility in December, amounting to $158.4 million each. Furthermore, it is expected to repay $240.1 million from the Stand-By Arrangement program.
The Egyptian government is also tasked with repaying $6.93 billion of external debt during the fourth quarter of the current year. This includes $2.8 billion for the government, $2.7 billion for the central bank, $2.3 billion for usually renewed deposits, and $973 million in bank loans. Other sectors are expected to repay around $470 million, according to World Bank data.
The IMF has stated that Egypt's payments to the organization will amount to approximately $6.46 billion in the following year, spread across 36 installments, covering both interest and financing obligations. The payment amounts are expected to decrease in subsequent years, reaching $5.3 billion in 2025, $2.7 billion in 2026, $1.8 billion in 2027, $1.05 billion in 2028, about $692 million in 2029, roughly $204 million in 2030, $201 million in 2031, and concluding with a final payment of approximately $198 million in 2032.
On another note, an IMF research report has examined Egypt's experience in dealing with the parallel foreign exchange market. The report highlights the stability of the official exchange rate against the dollar by the central bank across a wide range following the disruptions in early 2011. However, it notes that capital outflows by foreign investors depleted foreign exchange reserves, and the demand for foreign currency couldn't be met at this rate.
The gap between the parallel market and the official rate widened over time. By late 2016, the official rate was 8.8 Egyptian pounds to the dollar, while the parallel market rate was around 15 pounds. In November 2016, the official rate was allowed to converge with the parallel market rate, and as expected, the new equilibrium rate surpassed estimated levels.
The Central Bank of Egypt successfully rebuilt foreign exchange reserves significantly, reaching $45 billion in October 2019.
