Egyptian Minister of Finance, Ahmed Kouchouk, recently underlined during a meeting with Hiroshi Matano, executive vice-president of the Agencemultilateral Investment Guarantees (MIGA), the importance of the integration of international expertise to explore new financing tools intended to reduce debt levels and reduce debt service costs. This meeting was held on the sidelines of the Spring Meetings of the IMF and the World Bank in Washington.
At a time when Egypt seeks to diversify its sources of funding, these comments open several avenues for reflection. The need for innovative financial instruments is particularly crucial for emerging economies like that of Egypt, struck by notable economic challenges, aggravated by global factors such as fluctuations in raw materials markets, geopolitical crises and COVVI-19 pandemic.
### The Egyptian economic context
The country has known, in recent years, a rise in public debt, accentuated in particular by high budgetary deficits. According to recent data, the debt ratio compared to GDP has continued to increase, thus raising questions about the sustainability of this debt in an uncertain global economic context. The situation calls for an urgent need for specific reforms and adapted financing mechanisms that can ease this burden.
### Role of investment guarantees
Minister Kouchouk clarified the importance of investment guarantees as a key tool to restore the confidence of investors, both local and international. The interest in Miga, which offers guarantees to investors in developing countries, is part of a larger strategy aimed at attracting long -term private investments. These guarantees have the potential to reduce the risk perceived by investors, a crucial aspect in a climate where distrust can slow down essential development projects.
This approach raises questions on the effectiveness of investment guarantees as a stabilization tool. Some criticisms note that guarantees can sometimes mimic illusory security, without really approaching the structural foundations of the economic challenges of a country. Are the nature of the projects supported by these mechanisms also deserves meticulous examination: are they in line with the real development needs of the country or do they mainly respond to external interests?
## international cooperation
Strengthening cooperation with organizations like Miga is a positive approach, but it must be integrated into a more global vision. It is essential for Egypt to develop a strategy which is not only limited to attracting foreign capital, but which also envisages financing methods promoting sustainable economic development. This could involve an emphasis on priority sectors such as education, health and public infrastructure.
In this context, dialogue with international financial institutions – notably the IMF and the World Bank – remains a crucial issue. The conditions of approval of financial projects must be analyzed with care, in order to avoid the reproaches of excessive austerity which can sometimes accompany the intervention of these entities.
### Final reflections
In conclusion, Kouchouk’s Declaration evokes constructive tracks for the economic future of Egypt, but it must result in concrete and thoughtful actions. Improving funding and strengthening investor confidence is strategic stages, but that should not obscure the importance of deep structural reforms.
Economic development requires a delicate balance: attracting investments while ensuring that the benefits of these investments really benefit the population. This requires an open and constructive dialogue, both national and international, to build a lasting and prosperous future. The road to go is still long, but with the right commitment, it is possible to open new paths for the economic development of Egypt.