MENA records fastest accumulation in external debt stocks, Egypt biggest borrower: WB

According to Daily News Egypt, Countries in the Middle East and North Africa (MENA) recorded the fastest accumulation of external debt stocks, on average 7%, propelled by the 15% rise in Egypt, the region’s biggest borrower in 2018, the World Bank mentioned over its Debt Report 2020.

This is the first Debt Report the World Bank (WB) team releases. The WB will publish a new series of Debt Reports online, at regular intervals, over the course of the year. Their aim is to provide users with analyses of evolving trends and development related to external debt and public debt in individual countries and regional groups, to keep users abreast of debt-related issues and initiatives.

In Egypt, net long-term debt inflows rose 13% to $16bn with a 20% fall in inflows from official creditors, primarily the International Monetary Fund (IMF) and regional multilateral institutions in 2018. This was more than offset by increased inflows from commercial banks to public sector entities.

Together Egypt and Lebanon absorbed 90% of net long-term debt inflows to the region in 2018 as most countries saw net debt, the report said.

The Central Bank of Egypt (CBE) announced on 27 January that Egypt’s external debt increased by 17.4%, reaching $109.4bn by the end of the first quarter (Q1) of the current fiscal year (FY) 2019/20, in comparison with $93.1bn by in Q1 FY2018/19.

Moreover, the downturn in net equity flows was driven by reduced inflows of foreign direct investment (FDI) to Egypt, Jordan, and Iran, the report said, adding that FDI inflows to Egypt fell 8% in 2018, but remained robust, with $6.8 bn directed primarily at the oil and gas sector, equivalent to 35% of all FDI inflows to the region that year.

In MENA, net financial flows amounting to $43.8bn in 2018 were changed very little from the prior year, but were characterised by a shift in the composition of debt flows with a sharp decline in inflows from official creditors and outflow of short-term debt offset by a 67% rise in long-term debt inflows from private creditors.