CAIRO (Realist English). Egypt’s armed forces rejected government requests in December to help ease the country’s deepening debt crisis, despite allegedly holding secret reserves exceeding Egypt’s total foreign debt, senior banking and government officials told Middle East Eye.
The claims highlight mounting concern over the opaque role of the military in Egypt’s economy at a time of acute fiscal stress, with the government struggling to meet external debt obligations amid shrinking foreign currency reserves and tightening domestic liquidity.
Egypt was due to pay about $750 m in loan repayments to the International Monetary Fund by the end of December but missed the deadline. As a stopgap, officials agreed “in principle” to deduct the instalment from an upcoming IMF tranche, with interest added, banking sources said. The exact terms have not been disclosed by either Cairo or the IMF.
A senior banking official said the government sought to borrow 3 trn Egyptian pounds ($63.7 bn) domestically, but banks refused due to limited liquidity, leaving the military as the last option. The request was rejected by the head of the army’s Financial and Administrative Authority, even after Prime Minister Mostafa Madbouly personally appealed to Defence Minister Abdel-Megeed Saqr.
It remains unclear why Madbouly did not make a similar request to President Abdel Fattah el-Sisi, the supreme commander of the armed forces, who is believed to exercise direct control over the military’s finances.
Egypt’s IMF obligations include SDR 264 m ($377.8 m) due in December and SDR 194 m ($277.6 m) in January, while total external debt payments for 2025 exceed $60 bn.
Officials claimed the military holds substantial dollar reserves — potentially exceeding Egypt’s total external debt of $161 bn — which are physically deposited in the National Bank of Egypt and Banque Misr, but remain inaccessible to civilian authorities. These figures could not be independently verified.
According to one senior banker, the funds are “real and physically held” inside Egypt, yet “entirely beyond the reach of civilian authorities”. While the military could theoretically cover Egypt’s external and domestic debts, the official said, it refuses to relinquish control over its economic empire.
The military’s economic dominance has expanded steadily since the 1952 revolution and accelerated after the 2011 uprising, deepening further under Sisi’s rule. Today, it spans construction, agriculture, imports and exports, real estate, infrastructure and mining — notably gold.
Officials estimate the armed forces control about 50% of Egypt’s gold industry, with revenues flowing directly into military accounts. A 2014 law grants the Defence Ministry sweeping authority over mineral exploitation, while military-owned firms enjoy tax exemptions, preferential access to land and cheap labour via conscripts.
In July, the IMF warned that Egypt’s military-driven economic model was stifling private-sector growth, deterring investment and locking the country into chronic debt. It cited “preferential treatment” for military-linked firms as a major structural problem.
On 23 December, the IMF said it had reached a staff-level agreement on the fifth and sixth reviews of Egypt’s $8 bn Extended Fund Facility, potentially unlocking $2.5 bn in new financing, plus $1.3 bn under the Resilience and Sustainability Facility, pending board approval. The fund again urged faster divestment of state assets and a reduced role for the state — and the military — in the economy.
Despite past emergency interventions, including a reported $10 bn military injection during a 2022 dollar crunch, officials said repeated proposals for the armed forces to contribute to debt repayments — even for loans taken out in their own name — were firmly rejected.
“The message was clear,” one official said. “The military will not be touched, even as the state struggles to pay its debts.”
