Egyptian Army Holds Billions In Secret Cash As Country Misses Debt Deadline
Via Middle East Eye
Egypt's armed forces in December rejected government pleas to help ease the debt crisis despite holding more than Egypt's total foreign debt in secret reserves, senior banking and government officials told Middle East Eye. The claims underscore mounting concerns over the opaque role of Egypt’s military in the economy at a moment of acute fiscal stress, as the government struggles to meet debt obligations amid shrinking foreign currency reserves and tightening domestic liquidity.
Egypt was expected to pay about $750m in loan repayments to the International Monetary Fund (IMF) by the end of December but failed to meet the deadline. As a last resort, it was agreed "in principle" for the instalment to be deducted from Egypt’s upcoming IMF tranche, with interest added, official banking sources told MEE.
However, the precise terms of the arrangement remain unclear, with both the Egyptian government and the IMF keeping the details out of the public domain. "The government sought to borrow three trillion Egyptian pounds ($63.7bn) by December, but domestic banks refused, citing limited liquidity," a senior banking official said, speaking on condition of anonymity for security concerns. "With no other borrowing options available, the government turned to the armed forces."
Egyptian special forces soldiers, via AFP
The official added that the head of the military’s Financial and Administrative Authority rejected the request, even after the issue was raised with the defense minister.
"Prime Minister Mostafa Madbouly in December called Minister of Defence Abdel-Megeed Saqr, urging him to help cover the latest IMF loan instalment, but the plea was firmly refused," the official, who spoke to MEE in late December, added.
It was not clear why Madbouly did not extend the same request to President Abdel Fattah el-Sisi, who is the supreme commander of the armed forces and who is presumed to have direct control over the reserves. Egypt’s debt obligations to the IMF include SDR 264 million ($377.8m) in December and SDR 194 million ($277.6m) in January.* Broader external debt obligations for the year 2025 exceeded $60bn.
The banking official also claimed that the country’s military holds a sizable amount of dollar reserves, which are inaccessible to civilian authorities. The official provided an estimate that exceeds Egypt’s total external debt of $161bn. MEE is not citing the exact amount because it could not independently corroborate the banker’s information.
The senior banker, who has direct oversight of government accounts, claimed that the military funds are "real and physically held" inside the country’s two main state-run banks, the National Bank of Egypt and Banque Misr, yet "remain entirely beyond the reach of civilian authorities".
“These funds are physically held in Egyptian banks and it is impossible to dispose of them or use them to repay debts," the official told MEE.
The official argued that the military apparatus could "theoretically" cover Egypt’s external and domestic debts and resolve the ongoing hard-currency crisis, but would not relinquish control of the economy. According to the official, the exact volume of military projects and details about the funds remain off limits and are subject to no oversight, known only to President Sisi and the army's top brass.
An Egyptian presidential source also cited a similar number, and confirmed the presence of army deposits in the two banks, without elaborating further. This is a significant allegation that shines a light on the opaque nature of the Egyptian army’s financial resources.
Egyptian banks do not provide details of clients to the press. The Egyptian army does not disclose the military’s financial records, which remain beyond civilian oversight.
In November, local banks extended 1.5 trillion Egyptian pounds to the government to cover more than $350m in loan instalments, leaving little room for further lending. Madbouly in late December told reporters at a press conference that his government was due to “reduce debts to unprecedented levels” by the end of the year.
State-affiliated media meanwhile floated the idea that a “surprise” and “bombshell” announcement would be made by the prime minister “within days” with respect to the reduction of debts. But no major announcements in this regard were made by the end of the year.
Previous interventions
The banking official told MEE that the armed forces intervened financially during a severe dollar shortage in 2022 that left imported goods stuck offshore because importers could not access the hard currency needed to pay port fees.
“At the time, the military injected $10 billion to resolve the crisis, a move the prime minister publicly framed as an emergency measure, though he only hinted at the army’s intervention without direct mention,” the senior official recalled. “Repeated proposals for the military to contribute to repaying Egypt’s mounting external debt, or even a small portion, were firmly rejected. Officials were instructed not to raise the issue again under any circumstances,” the official added.
“This stance persists even though a significant portion of Egypt’s debt burden is linked to arms purchases or investments from which the military has financially benefited,” the official explained. “Even suggestions that the armed forces should repay loans taken out in their own name were dismissed,” they explained.
A second senior official at a state bank, familiar with discussions around the debt crisis, told MEE that “the military had rejected repeated proposals to contribute, even partially, to Egypt’s external debt repayments, including offers for the armed forces to pay down loans taken in their own name.”
“Every time the idea was floated that the military could help with debt, even by covering its own obligations, it was shut down,” the second official added.
Gold revenues
The military’s grip on the Egyptian economy dates back to the mid-20th century, following the July 1952 revolution, when army officers overthrew the monarchy. Its economic role expanded significantly after the 2011 uprising, when the Supreme Council of the Armed Forces (SCAF) assumed control following the ouster of long-time autocrat Hosni Mubarak.
The situation intensified under President Sisi, who assumed power in 2014 after leading a coup that removed Egypt’s first democratically elected civilian president, Mohamed Morsi. Since then, the military has steadily expanded its presence in construction, agriculture, and other civilian sectors, justifying its reach as a means to deliver major national projects and secure economic stability.
The military’s revenues, which are not subject to civilian oversight, have been driven by a vast network of companies and investments operating across nearly every sector of the economy, with military-owned firms dominating much of Egypt’s import and export activity and generating substantial profits.
Additional income comes from land sales, real estate projects, and large-scale infrastructure schemes, including toll gates on major highways, whose daily revenues, amounting to millions of pounds, are channeled directly into military accounts. “Almost all aspects of the country’s economy are now controlled by the military,” the first senior banking official said.
“The military carries out multi-billion-dollar imports of strategic and essential goods, which are then supplied to the government at a profit,” the official added. “The proceeds flow directly into military-controlled bank accounts that civilian authorities cannot access.”
Even when the state faces acute cash shortages, the official said, government borrowing remains entirely separate from military holdings. The armed forces are the only entity permitted to export certain goods, including rice, despite a government ban on its export. The Egyptian army is also believed to control about 50 percent of the gold industry, the official said.
A 2014 law grants the Ministry of Defense authority to approve mineral exploitation and levy fees on all mining operations, with the overwhelming majority of extraction sites in military-controlled zones.
Together, these exports generate hundreds of millions of dollars each month, the official said, all deposited directly into military accounts. Military-owned and state-run firms benefit from tax exemptions, access to prime land, and army conscripts as cheap labour, all while operating with very limited financial transparency.
“Keep in mind that the military receives 50 percent of the output from Egyptian gold mines, with the proceeds going directly to it,” said the source. “This is important because it represents a significant contributor to the military’s dollar-denominated income.
“The value of gold revenues accruing to the armed forces is approximately $500 million annually. This is in addition to the importation of raw gold, its reprocessing, and re-export, which generates revenues amounting to billions of dollars annually. “The military is, of course, the entity responsible for deciding on or directly importing gold, whether directly or through intermediaries. In both cases, it is the beneficiary.”
In July, the IMF warned in a damning report that Egypt’s military-controlled economic model is crippling private sector growth, deterring investors, and keeping the country in a cycle of debt and underperformance.
The international lender also noted that military-owned firms continue to enjoy “preferential treatment,” including tax breaks, cheap land, and privileged access to credit and public contracts.
On December 23, the IMF said it had reached the staff-level agreement with Egypt on the fifth and sixth reviews of its Extended Fund Facility, a move that could unlock around $2.5bn in new financing, alongside a further $1.3bn under the fund’s Resilience and Sustainability Facility, pending approval by the IMF’s executive board.
The reviews were combined to give Egyptian authorities more time to meet key programme targets under the expanded $8bn loan agreed in March 2024, which was designed to stabilise an economy hit by high inflation and foreign-currency shortages. While the IMF said recent stabilization efforts had delivered gains, it reiterated that structural reforms, particularly the divestment of state-owned assets and a reduction in the state’s role in the economy, must be accelerated.
*Special Drawing Rights (SDRs) are IMF reserve units that act like a common “value measure” countries use and can be swapped into real currency when needed (SDR = $1.43 on 13 January).
Tyler Durden
Tue, 01/13/2026 - 20:35
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