Egypt’s economy: When infrastructure outpaces production |
The international debt of the government of Egypt was estimated at 161.2 billion US dollars in June 2025, while it spends almost half of its budget to meet this debt. But behind these alarming figures, a much scarier picture is looming. How did Egypt, which has designs to be a major player in the region, end up paying yesterday’s bills with its most prized possessions?
The problem, according to economist Dr Hassan El-Sady of Cairo University, is not just the amount they have borrowed. It is about the motivations for their borrowing.
Egypt has been moving at a feverish pace. Since 2014, it has been borrowing on a gigantic scale to finance infrastructure development projects, new capital, new cities, and major highways crisscrossing the Sahara. Numerous power stations have been operating beyond capacity, while real estate developments that may best be described as monumental have taken place.
Nevertheless, the unfortunate truth is that debt payments account for 47.4 per cent of the budget for 2024/2025, up from 37.4 per cent in the 2023/2024 budget. Unfortunately, infrastructure projects do not pay the bills; factories and farms do. For example, Egypt built roads before ensuring that the vehicles could transport the commodities to the market.
The economic reasoning is simple. Any power-producing station needs manufacturers to use its electricity and other countries to sell enough products to generate returns on its investment. Any seaport needs an induced hinterland to load its containers with products. Egypt invested in sectors that constitute supply bases, but very little in industries that require those supplies. And what did they get? There is low investment in sectors such as agriculture and industry, and electricity production and........