The Egyptian government is making strenuous efforts to change an economic reality shaped by years of borrowing and rising debt-servicing costs, amid a period of relative economic stability supported by the recent steadiness of the exchange rate.
In this context, World Bank data revealed that Egypt’s external debt rose by about $2.48 billion during the third quarter of 2025, reaching $163.7 billion by the end of September, compared with $161.23 billion in June of the same year.
At the same time, the Central Bank of Egypt announced on Thursday that net international reserves increased to $52.594 billion at the end of January 2026, up from $51.451 billion at the end of 2025 – an increase of $1.143 billion – reflecting an improvement in external liquidity indicators.
This coincides with the Egyptian government concluding several major investment deals, most notably the agreement to develop Ras El-Hekma city on the northwestern Mediterranean coast. The deal, signed in early 2024 between the Ministry of Housing and Abu Dhabi Development Holding Company, provided Egypt – according to official data – with cash inflows totaling $35 billion over two months, disbursed in two tranches: the first worth $15 billion and the second $20 billion.
In November 2025, Cairo concluded its second-largest investment deal in history through an Egyptian-Qatari partnership to develop the Alamein Al-Roum area in Matrouh Governorate, with investments estimated at around $29.7 billion. Egypt received an initial payment of $3.5 billion in December, which is set to form the starting point of the agreement’s financial structure.
Despite these inflows, the continued rise in external debt has sparked widespread questions. Dr. Mohamed Fouad, an economist and member of parliament, told Alhurra that the recent increase in debt was not due to the general budget authorities, but rather to a rise of about $2.4 billion in the debts of economic authorities, companies, and the banking sector – $1.3 billion of which pertains to the banking sector – while the debts of budget authorities declined by around $1.23 billion.
Fouad pointed to a contradiction in the official discourse surrounding the trajectory of public debt, explaining that talk of its decline is limited to budgetary debt only, without accounting for total sovereign liabilities.
“All budget debts are sovereign debts, but not every sovereign debt is included in the budget,” he said.
For his part, economist Mohamed Anis explained that following the Ras El-Hekma deal, the government had announced a target of reducing external debt by $2 billion annually, a pledge reiterated by both the finance minister and the prime minister. However, the reality showed an increase in total debt. He attributed this to the debts of economic authorities, which – although not used to cover the budget deficit – remain sovereign debts guaranteed by the state, in his view.
Last month, the International Monetary Fund raised its forecast for Egypt’s economic growth during the current fiscal year to 4.7% for the second time in three months, expecting growth to accelerate to 5.4% by 2027, supported by continued economic reforms and improved macroeconomic stability indicators.
As debate over debt levels resurfaces, a proposal by businessman and banker Hassan Heikal has returned to the spotlight. Heikal called for implementing a “major swap” to address domestic debt by exchanging it for one of the state’s largest sovereign assets – the Suez Canal Authority. The proposal, submitted to the prime minister and later published on the X platform, has triggered a wide divide among economists.
Heikal proposed transferring ownership of the Suez Canal Authority from the Ministry of Finance to the Central Bank of Egypt, following an evaluation by the Central Auditing Organization and with the participation of an international firm. He argued that its value could reach $200 billion, based on annual revenues of nearly $10 billion. In his view, the central bank could service debt interest from canal revenues without touching depositors’ funds.
However, Heikal declined to comment to Alhurra on the controversy surrounding his proposal, limiting himself to saying that the government knows what it needs to do.
Assessing the proposal, Dr. Mohamed Fouad believes that despite its apparent appeal, it lacks clarity regarding implementation pathways and impact studies. He warned against being swept up by solutions that appear revolutionary without clearly defining financial relationships, mechanisms for asset transfers, and the settlement of liabilities.
Fouad also stressed that citing the experiences of other countries does not apply to the Egyptian case due to differences in context and instruments.
From a legal perspective, Dr. Mohamed Mahmoud Mehran, professor of public international law, told Alhurra that transferring sovereign assets from the government to the central bank may be acceptable from an accounting standpoint, but it does not address the core of the economic crisis. He noted that international institutions – chief among them the IMF – view debt from the perspective of the consolidated public sector, encompassing both the government and the central bank.
Mehran warned that such steps could be interpreted internationally as financial engineering aimed at polishing the numbers, potentially harming Egypt’s credit rating and investor confidence. He emphasized that transparency and structural debt treatment are far more important than cosmetic accounting solutions.
Ultimately, the divergent figures reflect the complexity surrounding Egypt’s economic file. Between external debt rising to $163.7 billion, foreign reserves increasing to $52.6 billion, and investment inflows exceeding $60 billion through major deals, the question remains one of sustainability rather than sheer size.
As debate returns over unconventional proposals – such as swapping debt for sovereign assets like the Suez Canal – experts remain divided between those who see them as an exceptional exit and those who warn of “financial engineering” that may beautify figures without addressing the root of the crisis, leaving Egypt’s debt management path open to multiple possibilities.
