Egypt’s External Debt Rose From 48 to 164 Billion Dollars: Not All From Projects

By The Edge Research Team

By The Edge Research Team

Egypt’s external debt has risen from about 48 billion dollars during former prime minister Ibrahim Mahlab’s tenure to about 164 billion dollars, broadly confirming the scale of the comparison he drew in recent public remarks, in which he cited a rise from roughly 48 billion to about 165 billion dollars and argued that the borrowing financed a wave of national projects that spared the economy a deeper stagnation. The explanation for that increase, however, is more complicated than attributing the whole of it to roads, power plants, housing and other national projects.

The nearest fiscal-year-end benchmark during Mahlab’s premiership, from Central Bank of Egypt data, was 48.06 billion dollars in June 2015. The most recent official figure, for December 2025, was 163.91 billion dollars, according to the central bank, and the stock remained below the record of 168.03 billion dollars reached in December 2023.

Measured from June 2015 to December 2025, that is an increase of about 115.85 billion dollars, or 241.1 percent, meaning the external-debt stock became about 3.41 times its June 2015 level, our calculation. That is equivalent to compound annual growth of about 12.4 percent over ten and a half years, our calculation. The December 2025 figure was about 4.12 billion dollars, or about 2.5 percent, below the December 2023 record, our calculation.

Mahlab was therefore broadly correct about the endpoints. His wider argument also contains an important truth: Egypt carried out an exceptional expansion of infrastructure, and some of the largest projects required foreign machinery, equipment, contractors and export-credit financing.

But the external-debt figure is not a project ledger. It also includes financing used to cover foreign-currency shortages, support international reserves, finance budget and balance-of-payments gaps, replace capital that left the country, pay for imported commodities and production inputs, and refinance earlier debts as they matured.

The debt bridge

The rise was not a single continuous project-financing cycle. It came through several distinct phases, with the largest increases coinciding with currency, pandemic and capital-flow shocks as well as the infrastructure programme.

Source: Central Bank of Egypt. Changes and percentages are The Edge calculations. The contextual descriptions identify the principal macroeconomic developments in each period and do not represent an official allocation of the change in debt by use.

The increase between June 2015 and June 2017 alone was almost 31 billion dollars. Debt then rose by another 44.46 billion dollars between June 2017 and June 2020 and by 32.22 billion dollars over the following two years. These movements cannot be explained solely by the construction cost of projects completed in the same periods.

What Egypt built

Separate Ministry of Planning assessments illustrate the programme’s scale, though they should not be combined into a single audited total. A “Seven Years of Building” report counted about 25,000 completed and ongoing development projects with costs exceeding 4 trillion Egyptian pounds, including more than 16,000 completed projects worth an estimated 2.2 trillion pounds and around 9,000 projects still being implemented at approximately 2 trillion pounds. A later ministry release placed the value of completed and ongoing projects between July 2014 and June 2021 at approximately 4.4 trillion pounds.

These figures must not be treated as equivalent to external borrowing. They combine completed and unfinished projects, public and commercially financed activities, domestic expenditure and imported components, and they are measured in Egyptian pounds at different dates and exchange rates.

Petroleum and natural gas

Petroleum and mineral projects accounted for approximately 1.2 trillion pounds of the ministry’s 2014 to 2021 project measure. The portfolio included the Zohr gas field, for which the ministry cited production capacity of about 2.7 billion cubic feet per day, the North Alexandria and West Nile Delta developments, the Mostorod refinery and other exploration, processing and pipeline investments.

A significant part of this sector was developed through foreign energy companies and investment structures rather than conventional sovereign borrowing. Including its full value as government-financed infrastructure would therefore overstate its contribution to public external debt.

Electricity and generation capacity

The Ministry of Planning placed the cost of implemented electricity projects at approximately 403 billion pounds through June 2021.

The centrepiece was the Siemens power programme. Siemens signed contracts worth 8 billion euros covering three combined-cycle gas plants at Beni Suef, Burullus and the New Administrative Capital, together with wind investments, designed to add about 16.4 gigawatts of capacity, including 14.4 gigawatts from the three gas plants. Siemens said its financial-services division structured a financing package largely covered by export-credit agencies. This is a clear example of infrastructure connected to external project financing, though an 8-billion-euro contract value should not be treated as 8 billion euros of debt outstanding at any particular date.

Roads and transport

The ministry reported 117 billion pounds of completed transport projects through June 2021, including the Wadi El-Natrun to Alamein road, the Sohag to Safaga route, the Cairo to Suez road and upgrades to the Western Desert road, and said approximately 9,200 kilometres of roads had been paved. A later review reported that Egypt had built about 7,000 kilometres of new roads by June 2022.

The financing mix varied widely. Road construction carried out by Egyptian contractors and paid through the domestic budget or local authorities did not automatically create external debt. Imported trains, signalling equipment, electrical systems and foreign engineering contracts, by contrast, created direct foreign-currency requirements and in some cases externally guaranteed loans.

Housing, cities and informal settlements

The cost of housing and informal-area development projects implemented through June 2021 was estimated at 225 billion pounds. The programme included 417,000 social-housing units and 182,000 units for residents of dangerous, unsafe or unplanned areas, and the ministry later reported that 322 unsafe areas had been developed by June 2022.

Most social housing is a pound-denominated activity funded through public entities, land sales, domestic banking facilities and budgetary resources. Its social and employment effects can be substantial without making it a direct explanation for dollar-denominated debt.

The New Administrative Capital and other fourth-generation cities present a more complex case. The IMF’s public-investment assessment noted that a “central projects” category emerged from fiscal 2017 and 2018 and that some megaprojects were implemented outside the conventional general-government budget by public corporations and economic authorities. This complicates efforts to reconcile project costs, government guarantees and external liabilities using budget data alone.

Water, wastewater and rural development

Egypt expanded drinking-water and wastewater capacity substantially over the period, and the first phase of the Decent Life, or Hayah Karima, rural-development initiative covered 1,477 villages with more than 17 million residents, according to the government.

These projects address important service deficits but generally earn revenues in Egyptian pounds. Where they use external loans, their ability to service foreign-currency debt depends on broader fiscal resources rather than direct dollar or euro income from the asset.

Education and health

The Planning Ministry reported approximately 51 billion pounds of completed health and pre-university education projects through June 2021. These included the construction, replacement or expansion of about 67,000 classrooms, alongside the construction or development of 393 hospitals and 104 health units and family-health centres. As with social housing and rural infrastructure, these investments primarily generate social and productivity returns rather than direct foreign-currency cash flows.

Which flagship projects were directly connected to foreign financing?

The New Suez Canal illustrates why the distinction matters. The 72-kilometre project raised about 64 billion pounds through investment certificates sold to Egyptian nationals and entities within about eight days. That created a domestic repayment obligation, but it was not structured as a conventional foreign sovereign loan.

The monorail provides the opposite example. UK Export Finance agreed to support the National Authority for Tunnels in developing two Cairo monorail lines totalling 96 kilometres, with a principal value of about 1.9 billion euros, an identifiable foreign-financed infrastructure exposure.

The high-speed rail network is larger. Siemens’ share of the combined contract was valued at 8.1 billion euros, including 2.7 billion euros for the first line, for a network of about 2,000 kilometres linking 60 cities, with a 15-year maintenance agreement. A supplier’s contract value, however, may include locally executed work, maintenance, equipment supplied over several years and amounts not yet disbursed, and cannot be inserted directly into the external-debt stock without a corresponding loan and disbursement schedule.

El Dabaa is more clearly linked to sovereign external project finance. The plant is designed to contain four Russian VVER-1200 units with combined capacity of 4.8 gigawatts. Russia and Egypt concluded an intergovernmental agreement in 2015 and a state export-credit arrangement covering the bulk of construction cost. The project therefore represents long-term project-linked external debt as disbursements are made, rather than an entirely domestic investment.

The actual reasons external debt increased

1. The 2016 foreign-currency crisis

Egypt entered 2016 with an overvalued official exchange rate, severe foreign-currency shortages, a widening current-account deficit and thin international reserves. The IMF approved a 12 billion dollar Extended Fund Facility in November 2016, with an immediate disbursement of about 2.75 billion dollars, and the programme documentation identified a financing gap of about 16.3 billion dollars for the first programme year, within a three-year gap of roughly 35 billion dollars. This money was not a loan for one specified bridge, power station or housing project. It was balance-of-payments financing intended to replenish external liquidity, support the reform programme and restore access to foreign currency.

2. Import-intensive public investment

National projects did contribute to external pressure where construction required imported turbines, trains, signalling systems, industrial equipment, steel, fuel, engineering services and other foreign inputs. The IMF concluded that expenditure on public projects, including national investment projects, contributed to current-account pressures before the 2022 crisis. That makes infrastructure part of the explanation, especially where projects were implemented faster than the economy’s recurring foreign-currency earnings could support. The relevant economic question is therefore not simply whether Egypt built assets, but whether the pace, selection and financing structure of those assets generated enough exports, import savings, user revenue or productivity gains to cover their foreign-currency costs.

3. Reserve accumulation and central-bank liabilities

External debt includes liabilities of the Central Bank of Egypt as well as direct government borrowing, commercial-bank debt and other resident-sector obligations. Deposits placed at the central bank by Gulf countries have repeatedly supported reserves and external liquidity. Such deposits strengthen the immediate foreign-currency position, but they are recorded as external liabilities and therefore raise the gross external-debt stock until they are repaid, converted into investments or otherwise restructured. By September 2025, multilateral institutions accounted for 28.5 percent of the external-debt creditor structure, Arab countries for 24.6 percent, and international bonds, notes and sukuk for 17.4 percent, while China represented 5.9 percent and Russia 3.2 percent. The structure confirms that Egypt’s debt is a combination of policy loans, deposits, securities and project-related financing rather than one pool devoted exclusively to construction.

4. The pandemic shock

The pandemic eliminated much of Egypt’s tourism income at the same time as foreign investors withdrew more than 15 billion dollars from the domestic debt market in March and April 2020. The IMF supplied about 8 billion dollars through a 2.77 billion dollar Rapid Financing Instrument and a 5.2 billion dollar Stand-By Arrangement to address urgent fiscal and balance-of-payments needs, protect reserves and maintain stability. Construction on major projects continued and supported domestic employment, but much of the additional external borrowing in this phase replaced foreign currency lost through tourism and capital outflows rather than funding new infrastructure.

5. The 2022 commodity and capital-flow shock

Pressure returned in early 2022 as higher global food and energy prices raised Egypt’s import bill, while the conflict between Russia and Ukraine disrupted wheat and tourism flows. Approximately 20 billion dollars of non-resident funds left Egypt’s domestic debt market in February and March 2022. The central bank intervened in the foreign-exchange market and received 13 billion dollars of short-term foreign-currency deposits from Gulf partners, and combined official reserves and the central bank’s foreign-currency deposits at local banks declined by 12.1 billion dollars between January and March. The related increase in external liabilities was therefore largely a response to a sudden stop in portfolio financing and pressure on reserves.

6. Persistent trade and current-account deficits

Egypt’s merchandise import bill has continued to exceed its merchandise export receipts, and that pressure has not always been fully offset by services income, remittances and other current-account inflows. In the first nine months of fiscal 2025 and 2026, the current-account deficit reached about 14.6 billion dollars, while the merchandise trade deficit widened to about 47.8 billion dollars. Foreign direct investment generated a net inflow of 13 billion dollars, but portfolio investment recorded a net outflow of 4.4 billion dollars, including a 9.5 billion dollar outflow during January to March 2026. Medium- and long-term loans and facilities recorded gross drawings of about 8.2 billion dollars, principal repayments of 5.5 billion dollars and net use of 2.7 billion dollars over the nine months. These figures show that external borrowing continues to serve as one of the mechanisms for balancing recurring foreign-currency inflows and outflows. The World Bank has identified weak non-oil export performance, insufficient foreign direct investment and a gradual shift toward non-tradable and lower-value-added activities as structural contributors to external vulnerability.

7. Refinancing previous debt

A material share of new borrowing does not finance new spending. It replaces loans, bonds, deposits and trade facilities reaching maturity. When Egypt raises a new international loan or issues a bond to repay an earlier obligation, gross borrowing rises even though the transaction does not create a new road, factory or power plant. This is why debt disbursement, project expenditure and the change in the outstanding debt stock are three different figures. Debt can rise by less than gross borrowing when principal is being repaid, or remain broadly stable while large amounts are borrowed and repaid within the same period.

8. Exchange-rate valuation effects

Egypt borrows in currencies including dollars, euros, yen, yuan, dinars and special drawing rights. Because the debt is reported in dollars, movements between the dollar and those currencies can change the reported stock without any new cash being received. The central bank said the 8.3 billion dollar increase in external debt during fiscal 2024 and 2025 reflected about 5.4 billion dollars of additional external-loan and facility disbursements and about 2.9 billion dollars of valuation increases caused by the dollar’s depreciation against other debt currencies. Depreciation of the Egyptian pound does not mechanically increase the dollar value of a dollar-denominated loan, but it does make every dollar of debt more expensive in pound terms and can raise debt ratios by reducing the dollar value of domestic output.

Mahlab’s argument: what is correct and what is missing

Mahlab’s central point, in his recent public remarks, is that Egypt faced accumulated infrastructure shortages and that roads, electricity, water, housing and construction projects prevented economic stagnation and provided work for millions of people, and he acknowledged that the implementation period of some projects might have been extended to ease the financing burden. The official project record supports his assertion that Egypt delivered a large physical-investment programme: electricity shortages were addressed, the road network expanded, unsafe housing areas were redeveloped, water and wastewater capacity increased and major rail and power systems were begun.

What the record does not support is attributing the entire increase of about 116 billion dollars to those assets. Some projects were domestically financed, some relied on private or foreign investment, some carried explicit foreign loans, and others used a mixed structure. At the same time, tens of billions of dollars were borrowed to meet IMF-supported financing gaps, rebuild reserves, offset portfolio withdrawals, respond to the pandemic, absorb the 2022 commodity shock and refinance maturing obligations. There is also no publicly available official reconciliation that maps the full increase, dollar by dollar, to named projects and non-project uses, and the IMF has separately noted weaknesses in public-investment reporting, including the role of entities outside the conventional budget.

Why it matters

Debt-financed infrastructure is not inherently negative. Borrowing can improve economic welfare when it resolves energy shortages, lowers transport costs, expands industrial capacity, replaces imports or creates new foreign-currency earnings. The risk emerges when projects generate primarily pound-denominated social or commercial returns while the debt must be serviced in dollars, euros or other foreign currencies. A road may raise land values and employment, and a housing development may improve living conditions, but neither automatically produces the foreign currency required for repayment. The strongest project case is therefore attached to assets that measurably increase exports, tourism, logistics income, energy savings or private investment, our reading.

Outlook

Egypt’s external debt was broadly stable around 164 billion dollars through December 2025 and remained below the December 2023 record, and the external-debt-to-output ratio eased to 40.3 percent, as set out in our earlier analysis of the December 2025 debt position. Net international reserves rose to a record of about 55.1 billion dollars in June 2026, as we reported separately. But the economy continues to carry a large trade deficit and remains exposed to portfolio-flow reversals, energy imports, regional disruption and substantial external repayment obligations.

Containing the debt stock will require more than slowing public construction. It will require sustained export and tourism earnings, higher non-debt foreign investment, stricter evaluation of public and off-budget projects, transparent government guarantees, longer maturities and a stronger link between foreign-currency borrowing and projects capable of generating or conserving foreign currency, our reading.

The balanced conclusion is therefore that national projects materially increased Egypt’s financing and foreign-currency requirements, particularly where they relied on imported equipment or externally guaranteed loans, but they were only one component of the rise in external debt. The stock was also shaped by recurring foreign-exchange gaps, reserve support, IMF and other policy financing, global shocks, portfolio outflows, Gulf deposits and the refinancing of maturing obligations, our reading.

Sources: Central Bank of Egypt; Ministry of Planning and Economic Development; International Monetary Fund; World Bank; Suez Canal Authority; Egypt State Information Service; Siemens; UK Export Finance; Rosatom; and public remarks by former prime minister Ibrahim Mahlab.

Get Complimentary Insights

Follow us