Egypt rules out using Suez Canal to settle government debt

Egypt's Cabinet on Sunday ruled out using the Suez Canal or other state assets to settle government debt, describing a proposal to transfer ownership of the strategic waterway as "unacceptable" and a threat to national sovereignty. The statement responded to suggestions that state holdings could be transferred to the Central Bank of Egypt to offset domestic debt.

Hassan Heikal, an adviser to the prime minister, floated the idea on Saturday, suggesting that Cairo could use stakes in state-owned enterprises or even the Suez Canal itself to cancel liabilities held by the Central Bank. The Cabinet said the notion represented a "purely personal view" that did not reflect official policy, adding that such a scheme is "unacceptable and will not happen."

Canal Tied to National Security

The Cabinet said in a statement that there are no plans to swap, mortgage or transfer ownership of the waterway under any circumstances. The canal is directly tied to Egypt's national security and sovereignty and plays a central role in both the domestic economy and global maritime trade.

The government also rejected the broader premise of shifting state assets to the Central Bank to manage debt, arguing that moving holdings between public institutions would not reduce overall fiscal obligations. Public debt must instead be addressed through its structure, servicing costs, and impact on monetary policy, according to the statement.

Precedent Involving Media Authority

Heikal cited a recent settlement involving Egypt's National Media Authority — formerly known as Maspero — as a potential model, pointing to the 88.3 billion Egyptian pound ($1.77 billion) agreement announced Thursday. The government confirmed the settlement with the National Investment Bank but did not disclose specific terms, while stressing that the media authority case differed from proposals involving the Suez Canal.