A proposal to transfer Suez Canal assets or revenues to Egypt's Central Bank of Egypt (CBE) has sparked debate over the institution's independence and national economic security. Experts view the move as a temporary fix for government debt but one laden with structural risks. The analysis weighs supporting and opposing arguments for a balanced assessment.
In Egypt's economy, a proposal suggests transferring ownership of Suez Canal assets or revenue flows to the Central Bank of Egypt (CBE) in exchange for writing off the state's massive debts to the institution. This appears as a clever financial engineering maneuver at first glance, but it raises fundamental questions about national economic security and the central bank's independence.
From a structural opposition perspective, the central bank's primary role is overseeing monetary policy, not managing commercial or industrial assets like the Canal. This would create a conflict of interest and undermine the bank's international credibility as an independent regulator, especially as it seeks to divest historic stakes in commercial banks such as United Bank. The Canal, as a sovereign entity under unique laws, would face immense legislative and constitutional hurdles if placed on the CBE's balance sheet, making the Egyptian pound's stability hostage to geopolitical tensions—any global shipping disruption could directly hit the bank's finances. It risks a 'window dressing' trap, shifting debt from the Ministry of Finance to the CBE without structural resolution, potentially encouraging more borrowing. Moreover, global rating agencies like Moody’s and Standard & Poor’s emphasize net liquid assets; replacing sovereign debt with an illiquid asset like the Canal could weaken the bank's liquidity, contrary to preferences for gold, cash, and marketable securities.
From a procedural support angle, proponents argue for balance sheet optimization by converting 'non-yielding' government debt into 'productive' assets generating hard currency, saving billions in interest payments, reducing the fiscal deficit, and freeing space for social spending and infrastructure. Legally, placing the Canal under the CBE might offer greater sovereign immunity against foreign claims and enable cheaper bond issuance backed by its reliable revenues, leveraging the bank's creditworthiness.
In the final assessment, the proposal is seen as a cosmetic rather than structural solution, concentrating risks in one basket and risking covert inflationary debt financing. It may appeal to the government to lower the debt-to-GDP ratio but crosses a political and public 'red line' on the Canal, likely facing IMF opposition due to emphasis on central bank independence and reform transparency. Lacking successful international precedents, it warns of volatile outcomes; protecting the Canal and CBE requires independent tracks for genuine resource development and growth.
Written by Mohamed Abdel Aal, banking expert.