Egypt External Debt Drops $1.5bn in March

Egypt's external debt dropped by $1.5 billion in the first nine months of the 2011/12 fiscal year to reach $33.4 billion in March, data from the Central Bank of Egypt (CBE) showed. The bulk of the drop, according to the CBE, was caused by fluctations in the exchange rates of the euro and other major currencies against the dollar. This decline in the relative global power of US currency helped Egypt trim $1.08 billion from its debts. The remainder of the fall in debt was attributed to the sale of $210 million worth of debt to Egyptian residents, and the repaying of $187 million in bonds by non-residents since July 2011.

Egypt boasts a relatively healthy level of foreign debt, with ratio of debt service to current receipts (including transfers) standing at 5.2 per cent in March, down from 5.3 per cent in June 2011. The country's balance of payment deficit, however, is continuing to surge, hit by a sharp drop in tourism receipts and investment inflows. Net reserves, which have plummeted by more than half since early 2011, gained slightly for a third consecutive month in June 2012.

Analysts, however, say that such improvement is unlikely to be sustainable, as one-time payments and revaluations mask the country's potentially chronic fiscal problems. Debt service rose by $161 million to $2.6 billion between July 2011 and March 2012, compared with the same period of the previous financial year. The debt balance as a percentage of GDP retreated to 12.8 per cent at the end of March 2012, from 15.2 per cent at the close of March 2011.