The Egyptian government plans to borrow EGP 1.013 trillion from the local market over August and September, according to exclusive figures obtained by Daily News Egypt.
The Ministry of Finance will offer 32 treasury bill (T-bills) auctions worth EGP 960bn and 20 treasury bond (T-bond) auctions totalling EGP 53bn during the two-month period, the data shows.
The Central Bank of Egypt will auction EGP 506.5bn worth of treasury bills and bonds each month on behalf of the government.
Treasury bill auctions will cover 91-day, 182-day, 273-day, and 364-day terms, with a total value of EGP 300bn, EGP 260bn, EGP 180bn, and EGP 220bn, respectively.
For bonds, the government will offer four auctions of two-year bonds worth EGP 4bn, four auctions of three-year variable rate bonds worth EGP 8bn, eight auctions of three-year fixed rate bonds worth EGP 40bn, and four auctions of five-year bonds totalling EGP 1bn.
The Egyptian government aims to use the borrowed funds to repay existing debt and finance the national budget deficit.
As of January 2024, the total outstanding balance of local treasury bills and bonds was approximately EGP 4.966trn, according to the Ministry of Finance. Treasury bills accounted for about EGP 2.734trn, while treasury bonds were around EGP 2.232trn.
Egyptian banks are the primary investors in government treasury bills and bonds, which are regularly issued to cover the budget deficit.
These securities are offered through 15 primary dealer banks and subsequently resold in the secondary market to both domestic and foreign investors.
Finance Minister Ahmed Kouchouk has pledged financial discipline for the current fiscal year, aiming for a primary surplus of 3.5% of GDP. The government seeks to reduce the budget deficit to GDP ratio to 6.6% and extend the average debt maturity to 3.9 years by the 2026-2027 fiscal year.
The Cabinet has approved the draft budget for the 2024-2025 fiscal year, targeting a primary surplus of over 3.5% of GDP, a medium-term deficit reduction to 6%, and a decrease in the debt-to-GDP ratio to 80% by June 2027.
The new budget includes a strategy to set a legal debt ceiling, with adjustments requiring presidential and cabinet approval. Half of the proceeds from privatization will be allocated to directly reduce government debt, while efforts will also focus on extending the debt maturity period.
