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Egypt will clear $1.3 billion in outstanding payments to international oil companies by June, the country’s petroleum ministry said on Saturday, moving faster than its earlier repayment schedule.
The North African country had built up about $6.1 billion in arrears to foreign oil firms as of June 30, 2024, largely due to a prolonged shortage of foreign currency that delayed payments and affected investment and gas production.
Although the currency shortage has eased in recent months, some companies say new arrears have started building up again.
Under an earlier repayment plan announced in January, the government expected to still owe about $1.2 billion by June. The latest update suggests Egypt is accelerating efforts to settle the debt.
Officials hope clearing the backlog will encourage international oil and gas companies to resume drilling, which could help boost local energy production. Egypt’s output has been declining since reaching a peak in 2021.
Higher domestic production would also help the country reduce its growing reliance on energy imports.
Egypt’s energy import bill has more than doubled since the outbreak of the U.S.-Israeli war with Iran, putting additional pressure on government spending.
To manage energy demand, the government is reportedly considering remote work for some employees and earlier closing times for shops, possibly by 9 p.m., five days a week.
A recent note by the Institute of International Finance warned that higher oil prices could raise Egypt’s spending by between 0.2% and 0.55% of its GDP, at a time when the economy is still recovering from several recent shocks.
