Egypt's debt-servicing bill  is set to jump by almost a third in the next fiscal year, hampering the government's ability to boost economic growth from the slowest pace in two decades.The North African nation expects interest payments on debt to climb 31 per cent to 182 billion Egyptian pounds ($26 billion) in the fiscal year starting July 1, shows the draft budget, submitted by the government this week for lawmakers' approval. That's 26 per cent of projected spending, up from 24 per cent this year and more than double the 85 billion pounds sum paid in the 2010/2011 fiscal year that marked the start of the uprising against Hosni Mubarak.The plan comes on the heels of the third International Monetary Fund meetings in Cairo in two years, which ended this week without signing a $4.8 billion loan agreement as the government said it expected. Egypt's local borrowing costs are near seven-month highs and external yields have surged four times more than regional peers in 2013 as political infighting and diminished security deter investors.Growing deficit"It's not a healthy situation if you're spending such a high proportion on debt servicing," Liz Martins, Dubai-based senior economist at HSBC Bank Middle East, said on Tuesday. "It diverts resources that could be used more productively when the government is looking to boost growth." The economy may grow 1.4 per cent this year, according to HSBC forecasts, the slowest since 1992. Egypt relies on sales of treasury bills and bonds to domestic banks to finance its budget deficit, which the government seeks to narrow to 9.5 per cent of economic output next year from 10.4 per cent, according to the budget proposal.Egypt, the second-most indebted Arab nation  after Lebanon, is facing hurdles in reviving economic growth and trimming its budget deficit as the Islamist government of President Mohamed Mursi contends with growing opposition and social unrest.The government's $1 billion of benchmark 2020 euro bonds yielded 7.15 per cent on Tuesday, a jump of 111 basis points, or 1.11 percentage points, this year, data shows.