When debt gets too high, fighting inflation makes the debt problem worse — Egypt has lived through this loop before

🏦 What happens when a country’s unchecked debt piles up to the point that it starts constraining monetary policy?

The Central Bank of Egypt’s (CBE) Monetary Policy Committee meets on Thursday to decide whether to hold rates steady or resume cutting

Flipping the switch from monetary to fiscal policy

Let’s get theoretical. operate

While the two policies shouldn’t infringe on each other’s core objective, they still co-exist.

Functionally, what does that dynamic look like?

For fiscal authorities

Fiscal dominance at work

In fiscally dominant regimes

Where the loop starts — and doesn’t end. emerge

But as public debt and debt-servicing costs pass a certain threshold

Egypt’s case looks more complicated. a July 2026 study published in the Journal of Legal and Economic Research

It’s worth noting that Egypt’s current legislative framework does not fully prohibit the CBE from financing government deficits. Article 47 of Law No. 194 of 2020

Egypt’s experience during periods of economic stress since 2017

“Fiscal and monetary authorities in Egypt exhibit a moderately strong level of coordination

In recent years, the CBE has maintained a firm anti-inflationary stance