The Impact of Total Foreign Debt on the Economic Growth of Egypt (1980-2018)

Abstract

Foreign debt is considered to be a source of income for countries. If foreign debt is managed well and directed towards productive projects, then it might enhance the countries’ economic growth. However, foreign debt has many costs that might cause deterioration in the economy. This study aims to investigate how total foreign debt impacts the economic growth of Egypt for a time period of 39 years (1980-2018). In the methodology, descriptive statistics, unit root tests, Johansen co-integration and Vector Error Correction Model (VECM) are used. The results show that total foreign debt exerts a significant long run negative impact on the Egyptian economic growth, while the results are insignificant in the short run.