The Ministry of Finance intends to offer 35 bids for treasury bills and bonds worth EGP 315.5bn in August as part of a government plan that aims to borrow EGP 818bn from the local market during the first quarter (1Q) of FY2022/23.
According to the government’s plan, the finance ministry intends to issue 20 bill bids worth EGP 264bn and 15 bond tenders worth EGP 51.5bn.
The Central Bank of Egypt (CBE) — which will undertake this task on behalf of the government — will issue in August five bids for 91-day bills worth EGP 72bn, five for 182-day bills worth EGP 74bn, another five for 273-day bills worth EGP 38.5bn, and an additional set of 364-day bills worth EGP 79.5bn.
The plan also includes offering five Zero Coupon bonds with terms of one-and-a-half years worth EGP 36bn, three bids for three-year bonds worth EGP 11.5bn, and two five-year bids worth EGP 2bn.
The ministry is also offering three seven-year bond bids worth EGP 1.5bn and two 10-year bonds worth EGP 500m.
The banks operating in the Egyptian market are the largest sectors investing in bonds and treasury bills, which the government periodically offers to cover the state’s general 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.
It is worth noting that the ministry revealed that the volume of outstanding balances of local treasury bills and bonds amounted to about EGP 3.83 trillion by the end of May 2022.
According to the latest report published by the ministry on its website, the volume of outstanding balances of treasury bills until the end of May amounted to about EGP 1.374 trillion broken down to EGP 858.77bn in 364-day bills, EGP 313.88b in 273-day bills, and EGP 115.252bn in 182-day bills, in addition to EGP 86.627bn in 91-day bills.
According to the ministry, bids for bills amounting to about EGP 81.8613bn were due in June, while the rest of the existing bids are due throughout the remainder of the current year until 30 May 2023, taking into account that other bills with the same deadlines are re-issued on a periodic weekly basis.
This comes as the finance ministry revealed that the volume of outstanding balances of treasury bonds reached about EGP 2.455 trillion by the end of May 2022, of which about EGP 217.027bn are Zero Coupon bonds.
Furthermore, bonds worth EGP 54.586bn matured in June, while the rest of the bonds will mature from 11 August to 18 January 2037, taking into account that other bond bids are re-issued on a periodic weekly basis, just like the bills.
Minister of Finance Mohamed Maait indicated in his recent statements that the state’s general budget for FY2022/23 exceeds EGP 3 trillion, pointing out that its total expenditures reach about EGP 2.071trn, while the total estimated revenues are about EGP 1.518trn.
Maait also said that the government aims during the new FY to achieve a primary surplus of EGP 132bn at a rate of 1.5% and reduce the total deficit to 6.1% of the GDP, compared to a total deficit of 12.5% at the end of June 2016.
Moreover, it wants to place the debt rate on a sustainable downward path and reduce it to 84% of the GDP, compared to 103% at the end of June 2016, and reduce the debt service ratio to 7.6% of GDP, compared to 10%.
Finally, the government seeks to decrease budget expenditures to 33.3%, compared to 40% during the past three years, and diversify sources of financing to reduce the cost of development and extend the life of the debt.