EGYPT: DEBT AFFORDABILITY AND FOREIGN POLICY CONSTRAINED BY GULF FINANCING LIMITS

Wed, 03 May 2023

Egypt's struggling economy has faced significant challenges over the past year, including a devalued currency, limited foreign currency reserves, and high inflation. As a result, Egypt's Gulf partners have shown waning interest in providing unconditional aid, given the country's uncertain fiscal outlook. This reduced support is further compounded by structural issues within the Egyptian economy, such as weak property rights and institutions, and an overbearing state and military. Egypt's heavy reliance on Gulf financing also poses potential constraints to its foreign policy, requiring the country to balance the competing interests of the UAE, Saudi Arabia, and Qatar, while scaling down its involvement in regional issues.