The Impact of External Debt on Economic Growth the Case of Egypt

The external Debt problem is one of the most crucial problems that face the whole world’s countries nowadays, either developed or developing countries, creditor or debtor countries. Egypt has been suffering from the debt issue throughout the country’s modern history from the beginning of the 1990s like all developing countries. According to international standards, Egypt started to exceed the safe limits and reach 25.5% of debt to the total exports of goods and services. Consequently, the study aims at investigating the relationship between external debt and economic growth in Egypt and pointing out the impacts within the period (1996-2019) by adopting ARDL Model. The research reveals the external debt has a negative impact on GDPPC where every 1% increase leads to a 0.12%decrease in GDPPC in the short term. Besides, the insignificant relationship between ED/GDP and GDPPC in the long term the researcher suggests that Egypt must direct new and potential debts to investment so that the desired external assistance is achieved to reduce pressure on the public budget.