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The sustainability of public debt in Egypt: An analysis using the DIGNAR model

Article

Last updated: 25 Dec 2024

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Abstract

Over the past decade, the Egyptian government has grown increasingly concerned about the sustainability of its public debt. This study examines the sustainability of Egypt's public debt using various indicators. The DSF indicators showed contradictory results, as most external public debt showed weak ratings that allow more borrowing capacity. However, the debt service on external debt to exports was already high in 2022 and 2023. Moreover, the study applies the Debt, Investment, Growth, and Natural Resources (DIGNAR) model, which relies on the IMF projections to quantify the impact of changes in exports and private remittances from 2019 to 2026 on Egypt's public debt, assuming all other exogenous variables remain constant. The findings reveal a significant effect of changes in exports on changes in total public debt, domestic debt, and external commercial debt. Since the projections of the IMF show slight changes in private remittance, the researchers attributed the change in public debt to the change in exports. According to the DIGNAR results, the change in total public debt to GDP, domestic debt to GDP, and external commercial debt to GDP are expected to decrease by 2.6%, 1.6%, and 1%, respectively. Consequently, the study proposes several policy recommendations to enhance the sustainability of Egypt's public debt. These include, reducing debt services through debt restructuring and debt swaps, minimizing stock-flow adjustments, curbing inflation, and focusing on infrastructure investments with high returns. The findings of the DIGNAR model also confirmed the importance of promoting exports which necessitate encouraging industries as the highest priority.

DOI

10.21608/cfdj.2024.301870.2000

Keywords

Debt Sustainability- Public debt, - DIGNAR, - Debt decomposition, - Exports

Authors

First Name

Sherine

Last Name

Boshra Ghaly

MiddleName

-

Affiliation

Sadat Academy For Management Sciences

Email

sherine_ghaly@yahoo.com

City

القاهرة

Orcid

0000-0001-5062-9761

First Name

Sarah

Last Name

Hassan Serag

MiddleName

-

Affiliation

Sadat Academy For Management Sciences

Email

sarah.serag@sadatacademy.edu.eg

City

Cairo

Orcid

-

Volume

5

Article Issue

2

Related Issue

48284

Issue Date

2024-07-01

Receive Date

2024-07-05

Publish Date

2024-07-01

Page Start

1,287

Page End

1,320

Print ISSN

2682-3403

Online ISSN

2682-4531

Link

https://cfdj.journals.ekb.eg/article_368606.html

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https://cfdj.journals.ekb.eg/service?article_code=368606

Order

368,606

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المقالة الأصلية

Type Code

1,242

Publication Type

Journal

Publication Title

المجلة العلمية للدراسات والبحوث المالية والتجارية

Publication Link

https://cfdj.journals.ekb.eg/

MainTitle

The sustainability of public debt in Egypt: An analysis using the DIGNAR model

Details

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Article

Created At

25 Dec 2024