As part of its “Narrative for Comprehensive Development” initiative, Egypt has established a formal ceiling for external borrowing, limiting it to between 40% and 45% of the nation’s GDP. The External Debt Management and Borrowing Regulation Committee emphasized that this limit is strict, with exceptions granted only for emergencies and requiring direct Cabinet authorization.
The new framework focuses on tightening the governance of the borrowing process. Priority for future loans will be shifted toward essential requirements—such as food, medicine, and fuel—and toward bridging the financing gap. To ensure fiscal responsibility, projects will be reprioritized based on comprehensive economic feasibility assessments.
The government also aims to modernize its agreements with international development partners. The new guidelines favor concessional financing that offers more favorable terms, specifically seeking longer grace periods that extend past the completion of the relevant projects.
Additionally, Egypt is pursuing a strategy of restructuring its external debt through debt-for-investment swaps, modeled after the 2024 Ras El Hekma agreement. The country has already successfully implemented similar arrangements with Germany and Italy, totaling hundreds of millions of dollars to fund dozens of local development projects.
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