By Hossam Mounier
The government intends to borrow EGP 262bn to fund the budget deficit in the first quarter (Q1) of the new fiscal year (FY) 2015/2016. The step comes due to a plan by the Ministry of Finance, in coordination with the Central Bank of Egypt (CBE), that was sent to a number of banks last week.
The ministry’s plan shows the government is looking to issue treasury bills worth EGP 189.5bn, and treasury bonds worth EGP 72.5bn in the period between the beginning of July and the end of September 2015.
The CBE, which will carry out this mission on behalf of the government, will launch treasury bills and bonds auctions with EGP 80bn next July. This is in comparison to auctions worth EGP 83.25bn next August, and other auctions next September worth EGP 98.75bn.
According to the Ministry of Finance’s plan, auctions will be launched for: 91-day treasury bills with EGP 35.5bn; 182-day treasury bills with EGP 42.5bn; in addition to auctions for 273-day bills with EGP 56bn; and 364-day bills with EGP 55.5bn.
The plan also includes launching 18-month zero coupon bonds with EGP 11.5bn, three-year bonds with maturity date of June 2018, with EGP 12bn, in addition to three-year bonds with a maturity date of September 2018, with EGP 5.5bn.
The government will issue between July and September five-year bonds with EGP 15bn, and a maturity date of July 2020, and five-year bonds with a maturity date of August 2020, with EGP 6bn.
The plan also outlines the launch of seven-year treasury bonds with a maturity date of January 2022, and with EGP 3.5bn, in addition to seven-year bonds with a maturity date of August 2020, with EGP 6.75bn
Moreover, the government will issue 10-year bonds in the first three months of FY 2015/2016 with EGP 7bn, and a maturity date of May 2025. This comes in addition to 10-year treasury bonds with a maturity date of February 2025 and a value of EGP 5.25bn.
It is worth mentioning that the government launches the treasury bills and bonds in the market through 15 banks participating in the Primary Dealers system. These banks re-launch part of these bills and bonds to their individual clients, in addition to local and international institutions.
These banks include the National Bank of Egypt, Banque Misr, Banque Du Caire, CIB, Citi Bank, HSBC-Egypt, Misr Iran Development Bank, QNB Alahli, Crédit Agricole Egypt, Barclays Egypt, Alexbank-Intesa Sanpaolo, the Arab African International Bank, the Export Development Bank of Egypt, the Suez Canal Bank, and the Arab Bank-Egypt.