Egypt’s Ministry of Finance has revealed its intention to issue Treasury bills (T-bills) and bonds worth EGP 195.25bn during October 2021, as part of a larger plan that includes offering local debt instruments worth EGP 633.28bn to cover the budget deficit, during the second quarter (Q2) of fiscal year (FY) 2021/22.
According to the ministry, it intends to issue 16 T-bill offerings worth EGP 144bn, and 15 bond offerings worth EGP 51.25bn.
According to the plan, the T-bill issuance consists of 4 offerings worth EGP 15bn for 91 days, 4 offerings worth EGP 13bn for 182 days, 4 offerings worth EGP 57bn for 273 days, and 4 offerings worth EGP 59bn for 364 days.
The government’s plan also includes offering 2-year bonds worth EGP 15bn, 3-year bonds worth EGP 19.5bn, and five-year bonds worth EGP 2.25bn. The Finance Ministry is also scheduled to offer 7-year bonds worth EGP 1.75bn and 10-year bonds worth EGP 1.25bn. It is also offering 15-year bonds worth EGP 500m and Zero Coupon bonds for 1.5 years at a value of EGP 11bn.
The banks operating in the Egyptian market are the largest investors in bonds and T-bills. The offerings are issued 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.
A recent report by the Central Bank of Egypt (CBE) revealed a decline in the total volume of T-bills outstanding balance to about EGP 1.564trn in July 2021, compared to about EGP 1.588trn in June.
Public sector banks’ investments in T-bills scored about EGP 257.920bn in July, compared to about EGP 262.057bn in June.
It added that the investments of banks specialized in T-bills recorded EGP 37.062bn in July, compared to EGP 32.948bn in June. Private sector banks’ investments amounted to EGP 323.186bn in July, compared to about EGP 350.546bn in June. The investments of foreign banks in local debt instruments scored EGP 45.749bn in July, compared to EGP 46.022bn in June.
According to CBE, the size of the domestic public debt amounted to about EGP 4.742trn in June 2020, representing about 81.5% of the gross domestic product, of which 87.8% is owed by the government, 6% is owed by public economic bodies, and 6.2% is owed by the National Investment Bank (NIB).
CBE explained that the net balance of domestic debt owed by the government amounted to about EGP 4.163trn, an increase of about EGP 432.8bn during the fiscal year 2019/2020, while the net balance of economic public bodies amounted to EGP 286.4bn, an increase of EGP 3.5bn, and the net debt of NIB, minus the bank’s indebtedness with public economic bodies and the bank’s investments in government securities, reached about EGP 292.1bn, an increase of EGP 23.7bn.