Egyptian businessman Hassan Heikal on Thursday proposed a “grand swap” as a solution to Egypt’s domestic debt woes.
He explained that this solution involves transferring state investments to the sovereign wealth fund, with the state owning approximately 70 percent of it.
Half of this stake would then be offered to the Central Bank of Egypt (CBE), not commercial banks, in exchange for between five and seven trillion LE, according to the Central Auditing Organization’s assessment.
This amount would then be deducted from the state’s outstanding public debt.
This proposal was made Heikal’s interview on the program “Confrontation – The Right to Know,” hosted by Ziad Bahaa Eddin and broadcast on the ON and “al-Qahera wal Nas” channels.
Heikal explained that this swap would ease the government’s interest burden by transferring debt from commercial banks to the CBE, without impacting the banks’ financial health.
In return, the CBE would become responsible for managing the “Egypt Generations Fund,” which would encompass all state investments, thus allowing for greater flexibility in the public budget to meet its obligations to Egyptian citizens, Heikal said.
The CBE should not be ‘distracted’
Economist Khaled Saqr, a former head of a mission at the International Monetary Fund, responded to Heikal’s proposal.
He emphasized that while the debt issue must be addressed, the CBE should not be distracted from its primary role as this what ensures stability for the entire economy.
He continued, “We have debts that are not functioning efficiently or that need to be remanaged or restructured in a specific way.”
Saqr explained that in such cases, specialized companies could be established if needed, and these companies would fulfill their role as is done globally.
