The Egyptian government plans to borrow EGP 878.5bn from the local market through issuing securities during the second quarter (2Q) of fiscal year 2022/23, with the aim of financing the state budget deficit.

According to the government’s plan, the Ministry of Finance aims to offer 52 Treasury bill (T-bill) issuances worth of EGP 704bn, and 34 bond issuances worth of EGP 174.5bn from October to December 2022.

The Central Bank of Egypt (CBE), which undertakes this task on behalf of the government, will divide the T-bill and bond issuances into three parts: EGP 269bn issuances in October; EGP 338.5bn issuances in November; and EGP 271bn issuances in December.

According to the plan, there will be EGP 101bn worth issuances for a term of 91 days, EGP 62bn for a term of 182 days, and EGP 263.5bn for a term of 273 days, while it is scheduled to offer 364-day securities worth of EGP 277.5bn.

The Ministry of Finance has also intensified the offering of short-term bonds significantly, as it is scheduled to issue “Zero Coupon” bonds, for a period of one and a half years, at a value of EGP 75bn.

The Ministry is also scheduled to offer three-year bonds worth EGP 94.5bn, five-year bonds worth EGP 3.5bn, and seven-year bonds worth EGP 1.5bn.

The banks operating in the Egyptian market are the largest investors in bonds and treasury bills, which the government regularly issues to cover the budget deficit.

These bonds and bills are offered through 15 banks that participate in the primary dealers system in the primary market, and these banks resell part of them in the secondary market to individual investors and local and foreign institutions.

The Ministry of Finance has revealed earlier that the outstanding balance of local treasury bills and bonds reached EGP 3.960trn in June 2022.

According to the latest report published by the ministry on its website, the outstanding balance of treasury bills amounted to EGP 1.518trn in June, comprising EGP 844.599bn in 364-day bills, EGP 307.113bn in 273-day bills, EGP 122.625bn in 182-day bills, and EGP 244.320bn in 91-day bills.

According to the Ministry, the value of these issuances will be due from July 5, 2022 until July 28, 2023, taking into account that other issuances with the same deadlines are re-issued on a weekly basis.

The Ministry revealed that the volume of outstanding balance of bonds reached about EGP 2.441trn in June, of which about EGP 217.026bn were Zero Coupon bonds.

According to the Ministry, these bonds mature from July 21, 2022 until January 18, 2037, taking into account that other bond bids are re-issued on a periodic weekly basis, same as bills.

Minister of Finance Mohamed Maait indicated in his recent statement that the state’s general budget in FY 2022/23 exceeds EGP 3trn, pointing out that total expenses amount to about EGP 2.071trn, while the total estimated revenues are about EGP 1.518trn.

Maait said that the government aims to achieve a primary surplus of EGP 132bn during the fiscal year at 1.5%, and reduce the total deficit to 6.1% of GDP, compared to 12.5% in June 2016. It also plans to put the debt rate on a sustainable downward path to reach less than 75%. It also aims to reduce the debt to GDP ratio to 84% in June 2023 compared to 103% in June 2016, and reduce the debt service ratio to GDP to 7.6% in June 2023, compared to 10% in June 2016, along with efforts to diversify sources of financing to reduce the cost of development and extend the length of debt maturity.

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