CairoEgypt routed 60% of off-budget loans to the tunnels authority in FY2027.
The authority left the Finance Ministry covering LE38.7 billion in defaults; Egypt’s new allocation sits outside the IMF-audited budget.
Half the new lending is in foreign currency — a sovereign FX obligation the IMF’s audit does not capture.
Sources: Mada Masr
WHAT 'OFF-BUDGET' MEANS
A state-owned entity borrows in its own name, with an implicit or explicit sovereign guarantee. The debt does not appear in the headline budget deficit, but the government pays if the entity defaults. The liability is real; the disclosure is not.
THE EGYPTIAN VEHICLE
The National Authority for Tunnels was created in 1983 to build the Cairo Metro. It now borrows for road tunnels, bridges, and rail — projects that would otherwise sit on the Finance Ministry's books. When it cannot service the loans, the Treasury absorbs the default.
WHY THE IMF MISSES IT
IMF programs target the general government deficit and public debt-to-GDP. State-owned enterprises sit outside that perimeter unless explicitly consolidated. Egypt has resisted consolidation in every program since 2016 — the military-linked and infrastructure SOEs are where the off-books fiscal action lives.
THE FX TRAP
Foreign-currency borrowing by an entity that earns Egyptian pounds creates a currency mismatch. Every devaluation enlarges the local-currency cost of servicing the debt. Egypt has devalued the pound four times since 2022; each round made the existing FX stock harder to service before any new borrowing.
THE PRECEDENT
Greece's pre-2010 statistics famously hid debt through off-budget vehicles and swap arrangements with Goldman Sachs. The IMF and EU only discovered the true deficit after the crisis broke. The pattern — sovereign uses SOEs and derivatives to flatter headline numbers — recurs because the incentive recurs.
WHO HOLDS THE PAPER
Egyptian SOE debt is held mostly by domestic state banks — NBE, Banque Misr, Banque du Caire — which are themselves majority state-owned. A default does not trigger external creditor action; it shifts losses from one state pocket to another, ultimately landing on the Treasury or on depositors via bank recapitalization.