The Ministry of Finance has announced plans to hold 26 treasury bills (T-bill) and bond auctions during the current month of June, with a total value of EGP 418bn. These auctions consist of 16 treasury bill auctions valued at EGP 390bn and 10 bond auctions worth EGP 28bn.
This initiative is part of a broader strategy aimed at raising funds from the local market. Specifically, the government aims to borrow EGP 1.4915trn during the fourth quarter of the fiscal year 2023/2024. The borrowed funds will be used to repay existing debt obligations and finance the state’s budget deficit.
As part of this plan, the Central Bank, acting on behalf of the government, will issue the following treasury bills throughout June:
- EGP 120bn in 91-day T-bills
- EGP 100bn in 182-day T-bills
- EGP 90bn in 273-day T-bills
- EGP 80bn in 364-day T-bills
Additionally, the plan includes the issuance of the following bonds:
- EGP 16bn in zero-coupon bonds with a 546-day maturity
- EGP 11bn in 3-year bonds
- EGP 1bn in 5-year bonds
According to the latest report published on the ministry’s website, the total outstanding balances of local treasury bills and bonds reached approximately EGP 4.966trn in January 2024. Specifically, the outstanding balance of treasury bills amounted to approximately EGP 2.734trn, while the outstanding balance of treasury bonds was around EGP 2.232trn.
Banks operating in the Egyptian market play a crucial role as investors in the treasury bills and bonds regularly issued by the government to cover the state budget deficit. These securities are issued through 15 banks that participate in the Primary Dealers System in the primary market. Subsequently, these banks resell a portion of these securities in the secondary market to individual and institutional investors, both local and foreign.
Minister of Finance Mohamed Maait recently issued a decision to enhance the “Primary Dealers” system for government debt instruments. By acting as market makers in both the primary and secondary markets, this initiative aims to invigorate the government securities market and reduce the debt service burden. The incentives provided to these dealers align with the Ministry of Finance’s broader strategy to develop the government securities market, attracting new investor segments within Egypt, including individuals.
According to Maait, this decision contributes to achieving the Ministry of Finance’s strategic objectives of managing the debt portfolio in a balanced manner. It helps reduce the cost of government debt service and minimizes refinancing risks while ensuring the financing needs of the state budget are met.
