Egyptian government denies reports of transfer, exchange of Suez Canal for debt relief

An Egyptian businessman and finance expert has triggered controversy after suggesting a proposal for a ‘swap’ that includes the Suez Canal in a bid to eliminate domestic debt.

Hassan Heikal, who is also an advisor to the Egyptian cabinet, caused a stir after mentioning the Suez Canal as a state asset that could be involved in a swap, prompting the government to intervene and issue a statement denying it had any intention to transfer ownership of the canal to relieve debt.

The cabinet said in the statement, issued on Saturday, that the reports suggesting that ownership of some state assets could be transferred to the Central Bank of Egypt in exchange for settling part of the country’s domestic debt reflected “a purely personal vision of its author”.

The statement added that the proposal did not represent government policy or an initiative adopted by the authorities, and that the idea had been considered but relevant bodies had concluded it was not possible to implement and therefore it was not included as part of the government’s public debt management policies.

Growing controversy

The government reaction comes just two days after the proposal generated a widespread public response and became a major talking point in Egypt.

It also came at the same time a historic debt, owed by the National Media Authority (known as Maspero) to the National Investment Bank, was settled.

Heikal described the settlement as a smaller-scale model of what a solution could look like for the state as a whole.

He mentioned his proposal again in a series of posts on X, citing what he described as the “small swap – Maspero”, as well as arrangements involving electricity and petroleum companies and the Ministry of Finance.

Heikal said the state had eliminated Maspero’s debts through an asset swap, involving mainly land, while transferring the debt to the National Investment Bank. This enabled the authority to rid itself of its debt burden, while the bank received assets in exchange for the debt.

He added that that example could be applied on a broader national level in an effort to ease the country’s crippling debt crisis.

The idea was first floated by Heikal in January, where he suggested that a fund should be created into which state assets would be consolidated, followed by an exchange of those assets for domestic debt after the debt had been transferred to the Central Bank.

Heikal’s proposal is based on the view that the central problem facing the Egyptian economy is not simply the size of its debt, but the cost of servicing it.

 He said debt servicing consumes between 50 percent and 60 percent of state revenues, arguing that high interest payments are squeezing the public budget and limiting the government’s ability to spend on citizens, whether on education, universal health insurance, subsidies or wages.

He further argued that transferring the assets and debt could free the budget from a substantial part of the interest burden, thereby creating room for the state to spend on services that citizens directly experience.

According to the latest published official data, domestic debt stands at 1.057tn Egyptian pounds (about $219bn) as of the end of June 2025.

Many economists and politicians have criticised Heikal’s proposal, stating that it would mean that more money would need to be printed.

The proposal further divided opinions because it reignited conversations from 2022 over amendments to the Suez Canal Authority law and the creation of a fund affiliated with the authority that would have powers to sell, lease and exploit its assets. The controversy ended at the time with the government denying any intention to sell the canal itself.