Egypt announced on Saturday that it will pay $1.3 billion in outstanding arrears to international oil companies by June, moving up its previously scheduled repayment timeline. The decision comes as the North African nation seeks to stabilize its energy sector after a prolonged foreign currency shortage delayed payments, discouraged investment, and contributed to declining gas output. By mid-2024, Egypt had accumulated roughly $6.1 billion in arrears to foreign oil firms, with some companies reporting that payments are once again lagging despite slight improvements in currency availability.
Under the earlier timetable released in January, the government had anticipated that approximately $1.2 billion in arrears would remain by June. The accelerated repayment plan is expected to encourage foreign oil and gas companies to resume drilling operations, potentially boosting local production that has been in steady decline since 2021. Analysts say increased domestic output could help Egypt reduce its heavy reliance on energy imports, a critical concern as the nation’s import bill has more than doubled amid regional geopolitical tensions, including the ongoing U.S.-Israeli conflict with Iran.
The government has also considered energy conservation measures, including encouraging remote work for employees and enforcing earlier shop closures to curb electricity and fuel demand. According to the Institute of International Finance, the rising cost of oil could raise government expenditures by 0.2% to 0.55% of GDP at a time when the economy is still recovering from multiple successive shocks. Clearing these arrears may therefore play a key role not only in stabilizing the energy sector but also in supporting Egypt’s broader economic recovery.
