Egypt Affirms Suez Canal Will Not Be Used to Repay State Debt

The Egyptian government has affirmed its commitment not to use the Suez Canal or other strategic state assets as a means to repay government debt. The official statement was issued to quell speculation regarding plans to transfer state assets in order to reduce the fiscal burden.

On Sunday (30/8), the Egyptian cabinet stated that the strategic waterway is entirely outside any debt repayment scheme. The affirmation came after a proposal circulated suggesting the transfer of several state assets to the Central Bank of Egypt in exchange for a reduction of part of the government’s domestic debt.

The government described the proposal as “merely a personal view” that does not reflect official state policy. The cabinet stressed that the idea is unacceptable and will certainly not happen.

In its official statement, the Egyptian cabinet was very firm, particularly regarding the status of the Suez Canal. The government stated that there are no plans to exchange, pledge, or transfer ownership of the waterway for debt repayment purposes.

The Suez Canal is considered closely linked to Egypt’s national security and sovereignty. Moreover, the waterway plays a central role both in the domestic economic structure and in global trade flows.

The government also rejected the general idea of transferring state assets to the Central Bank. According to the government’s argument, moving assets and liabilities between public institutions would not automatically reduce the country’s total overall obligations.

Instead of transferring assets, the Egyptian government believes that the public debt problem must be addressed through more comprehensive technical fiscal measures, including:

Previously, the idea of using state assets was floated by Hassan Heikal, an adviser to the prime minister, on Saturday (29/8). Heikal suggested that Egypt use its shareholdings in state-owned enterprises or even the Suez Canal to offset domestic debt by transferring related obligations to the Central Bank.

He referred to the recently completed debt settlement model of Egypt’s National Media Authority (Maspero). Last Thursday, the government announced a debt repayment agreement worth 88.3 billion Egyptian pounds, or approximately Rp30.7 trillion, owed by the authority to the National Investment Bank, although details of the assets involved in the deal were not disclosed to the public.