EXCLUSIVE- The finance and planning ministries have agreed to set a USD 110 bn cap on foreign debt, a figure the government expects to reach within two to three years, a senior government official told Enterprise. Once we reach that mark, the government will move to cut its foreign borrowing as the financing gap shrinks and economic indicators improve, the official said. Studies have shown that exceeding this limit could result in borrowing costs becoming unsustainable, according to the official.

Background: The Finance Ministry began implementing a comprehensive debt reduction strategy in March, which aims to reduce debt to 80% of GDP by 2022. The strategy involves extending maturities on government debt and speeding up inclusion of informal businesses into the formal economy. The financing gap is expected to reach EGP 820 bn in FY2019-20, up from EGP 715 bn in the current fiscal year.