Egypt has been declared bankrupt by the World Bank due to the country's inability to pay its debts.
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Social media users are spreading news claiming that Egypt has been declared bankrupt by the World Bank as a result of its inability to pay its obligations.
Egyptian journalist Moataz Matar also alleged on his YouTube show that the World Bank revealed its "true colors" after it "put Egypt in debt."
Misbar investigated the circulating claim and found it to be false, as the International Monetary Fund (IMF) did not declare Egypt's bankruptcy due to debt non-payment, and no official website reported the news. In his recent speech on the Egyptian economy, Egyptian President Abdel Fattah al-Sisi did not declare "Egypt's implicit bankruptcy."
International Monetary Assessment of the Egyptian Economy
The claim began to circulate after IMF Director Kristalina Georgieva spoke about the state of the Egyptian economy at an IMF press conference on April 20. "When it comes to Egypt, we had a very successful experience with our previous programme," Georgieva said in response to a question about Egypt's new request to the IMF to support Egyptian economic performance, as well as the IMF's assessment of the Egyptian economy now and in the near future. "We are now witnessing a deterioration in the conditions of the Egyptian economy," she added, "because the country has suffered a major setback due to fuel and food prices, as well as its reliance on food imports from Russia and Ukraine."
Georgieva explained that Egypt was relying on its foreign exchange reserves to protect its local currency, but the country is now taking the need for financial stability and the continuation of reforms seriously. Georgieva emphasised the Fund's commitment to developing a highly sensitive program at a time when a large number of Egyptians are in danger. "We must ensure that critical social protection continues to be provided in Egypt to those most in need," she said.
Egypt Asks for IMF Support
The International Monetary Fund announced on March 23, 2022, that Egypt had requested Fund assistance in implementing a comprehensive economic program, at a time when the country was struggling to recover from the economic impact of Russia's invasion of Ukraine. Celine Allar, the head of the IMF mission in Egypt, stated that the rapid change in the global environment, as well as the impact of the ramifications of the Ukraine conflict, pose major challenges to countries around the world, including Egypt. Allar also explained, in her statement, that implementing a set of macroeconomic and structural policies would help to mitigate the impact of this shock on the Egyptian economy.
Improving Egypt’s Economic Growth
In a report released on April 19, 2022, the IMF increased its forecast for Egyptian economic growth this year to 5.9 percent, up from 5.5 percent in its previous forecast, assuming that the Egyptian economy will grow by 5 percent in 2023, despite the country's high debts, as shown in the screenshot below.
Egypt's High Debt
According to Middle East Eye, Egypt's debt, which has risen sharply, is on track to reach record levels by the end of the year. Egypt's debts totaled $392 billion at the end of the fiscal year 2020-2021, with $137 billion in external debt, according to the report. As the report points out, this is four times the amount owed in 2010 ($33.7 billion), and it also includes an additional $255 billion in internal debt. In 2010, the Egyptian Central Bank nearly doubled the country's domestic debt.
Furthermore, the report explained that Egypt's economy would likely suffer economic turmoil as a result of the COVID-19 pandemic and the effects of Russia's war on Ukraine, with an increase in food prices causing suffering to millions of Egyptians and recovery taking years.
Sisi's Latest Speech on the State of Egypt’s Economy
During President Sisi's speech on the state of the Egyptian economy at a press conference following an inspection tour of the Toshka region on April 21, Sisi stated that the Egyptian state is working to solve all of the problems it is facing at the same time. "The Egyptian economy was able to withstand and absorb the shocks of global crises and achieve positive growth," he continued, "but that the current crisis has caused a severe impact."
El Sisi unequivocally stated that the Ukrainian-Russian crisis revealed much and had a significant impact on countries around the world, including Egypt. "I was eager to have a strategic reserve of basic commodities to deal with potential crises," he explained. Sisi emphasized the importance of controlling population growth in order for citizens to feel an economic improvement, saying that "if we do not work to control population growth, we will not feel any economic improvement." He concluded by stating that, despite the COVID19 pandemic, Egypt's economic growth rates were positive as a result of economic reform.
Based on the findings, Misbar’s team confirms that, while Egypt is experiencing economic difficulties, as are many other countries, the country was not declared bankrupt due to its inability to pay its debts.
Translated by Dina Faisal