Egypt secures over $900 million in debt swap deals with Germany, Italy and China

Business Insider

11 hours ago

Egypt is strategically leveraging debt swap agreements to alleviate its debt burden and unlock development financing, amid growing calls for global financial system reform.
Egypt utilizes debt swap agreements to reduce financial strains and boost development financing.
Notable deals include partnerships with Germany, Italy, and China, totaling over $900 million.
Challenges like increased external debt and debt servicing costs underlined the need for global reforms.
According to the country's Minister of Planning, Economic Development, and International Cooperation Rania Al-Mashat, Egypt has signed debt swap deals worth over $900 million with Germany and Italy.
Additionally, the country has finalized a pioneering debt swap agreement with China, with the sole purpose of easing the country's financial pressures and supporting its development goals.
Al-Mashat made the announcement during a high-level session at the Fourth International Conference on Financing for Development (FfD4) in Spain.
The session highlighted the pressing fiscal challenges facing low- and middle-income countries, particularly in Africa.
Quoting new figures, Al-Mashat revealed that external debt among these countries increased to $8.8 trillion as of 2023. Consequently, debt servicing costs have surged to $1.4 trillion almost double what they were a decade ago.
' Over 60 percent of low-income countries are now in or near debt distress,' she warned, stressing that without immediate policy shifts, global public debt could rise above 100 percent of GDP by 2030.
For many African nations, whose economies are already stretched thin by climate shocks, currency depreciation, and external borrowing costs, she said the figures reflect an urgent need for reform.
Egypt seeks improved financing standards
The Minister further urged the international community to embrace more adaptable and transparent financing mechanisms.
She proposed responsible lending standards, the automatic suspension of debt during crises, and a global platform for sharing expertise on innovative financing instruments like debt swaps.
She also pressed multilateral development banks to scale up the use of Special Drawing Rights (SDRs), blended finance, and liquidity tools to support countries tackling climate change and development goals.
Egypt's approach could serve as a blueprint for other African nations seeking relief from unsustainable debt while pursuing long-term growth. As global financial talks continue, Cairo's bold strategy underscores the potential of innovation in rewriting Africa's debt narrative.