The government intends to borrow EGP 600bn from the local market through Treasury bills (T-bills) and bonds (T-bonds), Daily News Egypt has learned. The borrowing will occur in the next three months, during the first quarter (Q1) of fiscal year (FY) 2020/2021, and will fill the chronic deficit in the state’s budget.
Minister of Finance Mohamed Maait had expected for the public budget deficit to rise to 7.8% for the FY 2020/2021 budget targets, compared to about 6.3% in the basic budget scenario.
The minister also noted that debt, as a percentage of GDP, may reach 88%, compared to 83% in the same context. This would occur in the event that the repercussions of the novel coronavirus (COVID-19) pandemic continue to the end of 2020.
Under the Egyptian government’s plan, the Ministry of Finance plans to issue 52 T-bill tenders worth EGP 499.5bn and 32 T-bond tenders worth EGP 100.5bn.
The Central Bank of Egypt (CBE), which handles the task on the government’s behalf, will offer T-bills and T-bonds worth EGP 185bn in July. This will follow by a total of EGP 185.25bn offered in August, and EGP 29.75bn in September.
According to the plan, 91-day T-bills worth EGP 107bn are scheduled, 182-day T-bills worth EGP 120bn, next to 273-day T-bills worth EGP 133bn, and 364-day T-billsworth EGP 139.5bn.
The government’s plan also includes offering two-year bonds worth EGP 2bn, three-year bonds worth EGP 29.5bn, seven-year bonds worth EGP 22.5bn, 10-year bonds worth EGP 19.5bn, and 75-year bonds worth EGP 22.5bn.
The Ministry of Finance has also introduced new 15-year bonds worth EGP 3bn, the first time that government bonds have been launched on the local market for this period.
Banks operating in the Egyptian market represent the largest sector of investors in T-bonds and bills, which the government periodically put in place to cover the state’s public budget deficit.
The bonds and bills are issued through 15 banks that participate in the primary dealers system, who then resell a tranche of these on the secondary market to individual and institutional investors.