Egypt’s government faces a likely further rise in debt servicing costs over the coming year. But the good news is that the budget for the 2024/25 fiscal year (which started this week) reaffirmed the commitment to fiscal consolidation. So long as the government can keep running primary surpluses, this should help to return the public debt ratio to a downwards trajectory. Sovereign debt risks would also ease if policymakers are able to extend the average maturity of debt and shift to a more flexible exchange rate.
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