The Prime Minister writes: Debt is between the peak moment and the path of correction.. How does the state read today’s burden?

We are fully aware that the issue of public debt and debt service in Egypt is no longer just numbers circulated in economic reports, but rather has become a legitimate question for citizens about the ability to continue and the limits of tolerance in light of increasing living pressures.

 

This concern increases whenever the cost of life rises or public spending margins narrow, so the scene seems reduced to a direct equation between high debts and daily pressures. It is tangible.

 

However, the government’s responsibility requires dealing with this question with a degree of transparency and depth, because economies are not managed by the logic of reductionism, and their path cannot be understood in isolation from the international context and the successive shocks that have reshaped the world’s financing and growth priorities in recent years.

Since 2020, Egypt has not moved in a vacuum or in an isolated internal circumstance, but rather, like many developing economies, has faced an international environment. Extremely turbulent, it began with an unprecedented global pandemic, then a severe inflationary shock, followed by the fastest monetary tightening cycle the global economy has known in decades.

 

In this context, the pressures associated with the rise in debt and its servicing came as a reflection of the cost of maintaining economic and social stability and preventing deflation, not the result of a path separate from these shocks, before the state begins today, with difficulty, the transition phase from managing the crisis to resetting the course.

It may seem to some that it is a separate path from these shocks. The current numbers represent the end of the road, while the Egyptian case shows that the essence of the ongoing transformation is not determined by the size of the debt alone, but rather by the direction of its movement, the sources of its financing, and the structure of its terms. In one year, the state became a net repayer of external debt of about $3.4 billion, although the total balance remained high due to previous accumulations. Existing commitments worth $11 billion were also converted into long-term direct investment, in a move that reflects an intentional change in financial behavior from reliance on short-term borrowing to longer-term partnerships that are more linked to productive capacity.

 

This trend is reinforced by the fact that long-term debt now represents about 81% of the total debt, which reduces refinancing pressures and gives public finances a wider time space for management. This transformation may not appear in the abstract debt figure, but it becomes clear when tracking the movement of incoming and outgoing funds, and whether the new resources add future repayment burdens or contribute to alleviating them through investment and growth.

This transformation is completed by using unconventional debt management tools, including the debt swap mechanism, during which Egypt witnessed a prominent role in 2024.

 

Egypt was one of only seven countries that implemented agreements. Mubadala contributed to reducing external obligations in exchange for redirecting savings to development projects and social and environmental sectors.

 

The operation in which Egypt participated is also considered the largest globally during the year, which reflects the state’s reliance on internationally recognized tools to reduce the financial burden, and transform part of the debt obligations into resources that are used directly to support development priorities, instead of continuing to be depleted in servicing the debt alone.

Hence the real question becomes less related to how much. Debt, and more related to how it is managed, for what purpose it is used, and how its cost is distributed over time. Debt that puts pressure on the budget and crowds out social spending is radically different from debt that is redirected or replaced by investment flows that reduce the burden of repayment and support growth. Between these two models, the state is working today, on a complex path that is not free of cost, but it reflects an intentional trend to move from the logic of emergency financing to the logic of sustainability and financial discipline.

 

In this context, the government realizes that the controversy surrounding debt is linked to a specific moment in time, in which previous entitlements intersect with subsequent attempts at correction, so that the numbers appear at their maximum intensity before they begin to decline. International experiences indicate that the cost of transformation often manifests itself first in the form of high financial pressures, before the effects of restructuring and changing financing tools are reflected in indicators of sustainability and mobility. Hence, the fairness of the evaluation is determined between an immediate reading of the burdens, and a deeper reading of a path that is being worked on and whose results have not yet been completed.

Accordingly, the government’s handling of the debt file is not based on the duality of defense or condemnation, but rather on a more complex reading that distinguishes between circumstantial pressures and strategic choices. A country that is experiencing a peak in debt servicing is not necessarily a country that is heading in the wrong direction, just as improving numbers in the short term does not necessarily mean that the economic foundations are solidified.

 

Therefore, the most important criterion in evaluating policies remains the direction of movement: Is the financing structure changing? Is reliance on short-term debt declining? Are financial commitments replaced by flows capable of generating sustainable added value? At this point, the evaluation becomes objective, and the discussion moves from the clamor of numbers to the substance of the policies and their real impact.

 

From this standpoint, the government believes that the current stage represents a test of the solidity of the choices more than it is a test of their theoretical soundness. The transition from an economy that relies on rapid debt flows to one that attracts longer-term investment and redistributes financing burdens over time does not occur without cost, and does not pass without tangible social and financial pressures. However, the fundamental difference lies in that this cost, as harsh as it is, is linked to a conscious attempt to break the cycle of recurring debt, not to perpetuate it, and to rebuilding a more balanced relationship between financing and growth, not to temporarily escaping entitlements.

 

The biggest challenge before the government remains how to manage this moment with public opinion, not by reducing or denying the size of the burden, but by putting it in its correct context, explaining its causes, limits, and the expected path. To dismantle it. Financial crises are not measured only by the severity of their numbers, but rather by the state’s ability to transform them from a point of weakness into an incentive to restore discipline, and from immediate pressure to a long-term corrective path, the success of which is measured over time and by the real impact, not in a single moment.

In recent years, a proposal has emerged in the public debate linking the public debt file to financing specific projects, and presenting it in a single narrative form that reduces the crisis to projects that are said to be economically useless, such as roads and new cities, in exchange for some neglect. It is known as a human construct. This proposal has resonated with wide sectors of public opinion, because it provides a direct and simplified explanation of a complex issue, and turns a complex economic debate into a single reason that is easy to discuss.

 

However, this reading, as simple as it is, does not reflect the full picture. It confuses the direct financial return with the long-term overall economic return, and ignores that infrastructure projects are not undertaken as profit-making projects, but rather as investments that reduce production and transportation costs, raise labor productivity, and increase the economic value of assets, which are indispensable conditions for improving education, health, and creating sustainable job opportunities. Likewise, human building itself does not occur in a vacuum, but rather requires a construction and service environment capable of accommodating economic activity and attracting investment.

This proposal also ignores that the debt was not the result of these projects alone, but rather was formed in the context of successive external shocks that forced the state to finance existing gaps in order to maintain economic and social stability. In addition, social spending did not stop, but it was subjected to pressures that reduced its apparent impact due to inflation and population growth.

 

Hence, reducing the debt crisis to “roads and bridges” It does not provide an accurate diagnosis as much as it distances the discussion from the most important question: How do we transform the material investments that have been achieved into a real production base that enhances human building, instead of putting investment in stone and investing in people in a false confrontation. In this context, the government is committed to making the debt management process part of a broader vision for reform, and not a stand-alone goal. The true criterion for the success of economic policies will not be merely a decline in numbers, but rather in their ability to reflect on the lives of citizens, through an economy more capable of creating job opportunities, improving the quality of services, and enhancing justice in distributing the burdens of transformation.

Our duty at this stage is to continue on this path with a high degree of discipline and transparency, while recognizing the social and financial cost, and working to mitigate them as much as possible, until reform becomes an understandable and acceptable path, and not a mysterious burden that weakens trust between the state and society. In the end, the judgement of the path of debt is not at the peak moment, but at what follows it.

Countries are not always measured by their ability to avoid crises, but rather by their ability to manage them and transform them into more balanced and sustainable paths of correction. It is our responsibility to continue on this path with clarity and discipline, and to link debt management to real growth and human building, so that what we bear today becomes a necessary passage towards a stronger economy that is more capable of meeting the aspirations of citizens, and not a permanent burden that restricts the future.

Based on this commitment, the Economic Group is working on studying and implementing a package of exceptional solutions aimed at reducing the burden of debt and accelerating the path of financial sustainability, through integrated measures whose features are being finalized.

 

In implementation of the directives of President Abdel Fattah El-Sisi, President of the Republic, a number of these measures will be announced during the coming days, within the framework of a clear vision aimed at relieving pressures on public finances and enhancing the economy’s ability to grow, which will directly reflect on improving living conditions and expanding the margin of spending on basic services that affect the lives of citizens.

 

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