Egypt is actively using debt swap agreements to reduce its debt load and unlock funds for development, responding to increasing calls for reform in the global financial system.
The country’s Minister of Planning, Economic Development, and International Cooperation, Rania Al-Mashat, announced that Egypt has signed debt swap deals worth more than $900 million with Germany and Italy.
In addition, Egypt has completed a groundbreaking debt swap agreement with China, aimed exclusively at easing financial pressures and supporting the nation’s development objectives.
According to Business Insider, Al-Mashat made the announcement at a high-level session during the Fourth International Conference on Financing for Development (FfD4) in Spain, where the fiscal challenges facing low- and middle-income countries, especially in Africa, were a major focus.
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Citing recent data, Al-Mashat revealed that external debt among these countries rose to $8.8 trillion by 2023, with debt servicing costs jumping to $1.4 trillion, nearly double the amount from ten years ago.
“Over 60 percent of low-income countries are now in or near debt distress,” she warned, emphasizing that without urgent policy changes, global public debt could surpass 100 percent of GDP by 2030.
For many African countries, already struggling with climate shocks, currency depreciation, and rising borrowing costs, these figures underscore the critical need for reform.
The Minister called on the international community to adopt more flexible and transparent financing methods.
She proposed implementing responsible lending standards, automatic suspension of debt repayments during crises, and creating a global platform for sharing expertise on innovative financing tools such as debt swaps.
She also urged multilateral development banks to expand the use of Special Drawing Rights (SDRs), blended finance, and liquidity instruments to assist countries confronting climate change and development challenges.
Egypt’s strategy may offer a model for other African nations seeking debt relief while pursuing sustainable growth.
As global financial discussions continue, Cairo’s bold approach highlights the power of innovation in reshaping Africa’s debt landscape.
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Image Credit: CNN
