External financing in the Egyptian economy Between reality and hope .

Sufficient, continuous, and demand-aligned financing of productive activities, both locally and externally, leads to the sustainability and expansion of these activities. This positively impacts the state budget from two angles: firstly, by increasing the gross domestic product (GDP), which enhances the society's tax capacity and thus increases public revenues. Secondly, by increasing the supply of goods and services, which stabilizes prices and reduces inflation, significantly reducing the need for subsidies and the costs of social welfare programs, ultimately helping to reduce public expenditures. On the other hand, financing consumer activities usually has mixed effects on the state budget, both positive and negative. The final impact depends on the degree of flexibility of the Egyptian productive system. Based on this, economic rationality requires caution in resorting to external borrowing unless it is for the development of the production capacity of existing projects or for establishing new productive projects, which enhances the flexibility of the production system. The research concludes that it is essential to adopt policies that attract foreign direct investment, develop infrastructure, redirect workers' remittances towards productive sectors, and optimize the management of external debt. This will maximize benefits and minimize the costs and burdens on economic growth.