Despite track record of defaulting, govt continues to give National Authority for Tunnels bulk of off-budget borrowing
The government is once again directing the majority of its off-budget borrowing toward the National Authority for Tunnels (NAT) in the upcoming fiscal year, despite the authority’s track record of defaulting on its loans.
Over the past years, the NAT, an economic entity under the Transport Ministry, has relied heavily on borrowing from international, regional and domestic lenders — including substantial foreign-currency loans — to finance multibillion-dollar infrastructure transport projects which have been criticized for failing to pour back into state coffers.
Economic entities operate outside the state budget and are theoretically meant to generate revenue for the treasury. Instead, many take on large borrowing commitments backed by state guarantees while accumulating losses, leaving the treasury liable for covering the entities’ debts.
The fiscal burden of those guarantees rose sharply after 2024. In its report on the FY2024/25 final accounts, which Mada Masr reviewed, Parliament’s Planning and Budget Committee cited Central Auditing Organization figures showing that Finance Ministry payments toward unpaid loans and interest increased to LE284 billion, more than doubling from the previous year.
The NAT alone accounted for LE38.7 billion of the unpaid debt covered by the ministry.
Nevertheless, in the upcoming fiscal year’s state budget, the government is set to continue lending to the entities.
All loans and credit facilities allocated to economic entities in the new fiscal year are set to be funneled to only five of a total of 60: the Nuclear Power Plants Authority, Egyptian National Railways, the General Authority for Suez Canal Economic Zone, the New and Renewable Energy Authority and the NAT, according to the FY2026/7 budget’s statistical statement.
And despite the authority’s growing repayment problems, the government is continuing to direct the bulk of its off-budget borrowing toward it, with the NAT receiving around 60 percent of all loans and credit facilities allocation to economic entities in FY2026/27.
And according to the Planning and Budget Committee’s report on the FY2024/25 final accounts, the NAT was the second-largest economic entity to fail to meet its debt obligations in that year, leaving the Finance Ministry to step in and cover repayments.
Half of the NAT’s planned borrowing is external, making repayment costs subject to exchange-rate increases, the former committee member said. This would in turn increase liabilities borne by the Finance Ministry.
The risks surrounding Egypt’s foreign-currency debt have grown in recent years as the government’s external borrowing increases while repeated currency depreciations have pushed up the cost of servicing external loans.
The cost of debt-servicing consumes an increasing portion of annual fiscal resources, placing strain on an already precarious balance of payments.
And while Egypt’s contentious infrastructure drive continues to be financed through massive foreign loans, the government has recently pledged to reduce the public debt burden and bring debt-to-gross domestic product to its lowest level in 50 years.
Critics describe shifting the debt onto extra-budgetary bodies rather than ministries included in the budget as an accounting maneuver to make public debt appear lower on paper.
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المصدر: Mada Masr