Hassan Heikal: Local Public Debt Poses the Greatest Risk to Egypt’s Economy
Egyptian businessman Hassan Heikal warned that Egypt’s local public debt, which is about 10 trillion pounds ($196.4 billion), is a serious threat to the country’s budget.
Local Debt
In a meeting with Egyptian Prime Minister Mostafa Madbouly, top economists, and private sector leaders, Heikal stated that solving the issues of debt, governance, and the budget would fix most of Egypt’s economic problems.
Heikal explained how local public debt is affecting Egypt’s economy. “The local debt, which is 10 trillion Egyptian pounds ($196 billion), has interest rates of at least 30%, totaling 3 trillion pounds ($59 billion).”
He added that the biggest challenges for the Egyptian economy are the rising local and foreign debt levels and the government’s budget having to pay more interest.
Dollar Liquidity
Heikal pointed out that Egypt owes $140 billion in debt with an interest rate of 6%, which means the country has to pay about $15 billion in interest each year.
He said Egypt’s debt in dollars is higher than the dollar income, which hurts citizens’ purchasing power and reduces the budget for health and education.
To fix this problem, Heikal suggested that the Central Bank of Egypt should buy assets from the government that will take time to generate income, by setting up a sovereign fund.
Heikal explained that Egypt has spent a lot of money on large projects, like the new administrative capital. Some of these projects have not made a return yet and have even burdened the country with interest. He thinks the solution is for the Central Bank to buy these investments.
However, Prime Minister Mostafa Madbouly disagreed with this idea, saying the Central Bank cannot afford to take on more debt or pay the interest.
Published: 27th December 2024
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