Daily News Egypt obtained figures that revealed the government’s plan to borrow EGP 1.647trn from the local market during the third quarter of FY 2023/24, to pay previous maturities for debt instruments and finance the state’s general budget deficit.
The government’s plan shows its need for liquidity in the short term. The CBE, which does this task for the government, will issue bids for treasury bills and bonds worth EGP 647.25bn in January, EGP 540.25bn in February, and EGP 459.5bn in March.
The plan also shows that the ministry will issue bids worth EGP 440bn for 91 days, EGP 425bn for 182 days, and EGP 308bn for 273 days, while 364-day bills worth EGP 430bn are scheduled but not yet offered.
The ministry will also offer 728-day “Zero Carbon” bonds worth EGP 9bn, 3-year bonds worth EGP 27bn, and 5-year bonds worth EGP 8bn, including variable-return bonds worth EGP 7.25bn.
The Ministry of Finance stopped offering bonds with terms longer than five years and resumed offering “zero coupon” bonds after stopping them in the last quarter of 2022/23. It also offered 5-year variable-yield bonds for the first time.
Banks operating in the Egyptian market are the largest investors in treasury bonds and bills that the government offers periodically to cover the state’s general budget deficit.
These bonds and bills are offered through 15 banks that take part in the “primary dealers” system in the primary market, and these banks resell some of them in the secondary market to individual investors and local and foreign institutions.
Mohamed Maait, the Minister of Finance, said in his previous statements that the state was able to cover its expenses with its resources and achieve a primary surplus in the fiscal year 2017/2018 for the first time in more than 37 years. It maintained that for over six years to reach 1.6% of the GDP in 2022/23. He said: “In the fiscal year 2023/24, we aim to achieve the largest primary surplus in Egypt’s history, 2.5%, despite the severe global crises.”
The budget deficit rate to GDP was also reduced from 13.8% in the fiscal year 1981.1982 to 6% in June 2023 and is expected to decrease to 5% in June 2027. The debt rate to GDP declined from 159% in the fiscal year 1980/1981 to 95.7% in June 2023. It is targeted to reach 75% in 2027, by continuing financial discipline policies and maximizing public revenues.
A recent report by the Ministry of Finance showed that the deficit in the state’s general budget increased by 92% during the first 5 months of the 2023/2024 fiscal year, equivalent to EGP 312.13bn, reaching EGP 652.65bn from July to the end of November 2023, compared to a deficit of EGP 340.52bn in the same period of 2022/23. The budget deficit percentage of GDP was 5.51%, compared to 3.37%.
The increase in the budget deficit was due to the large jump in the debt interest expense item to EGP 713.41bn during the first four months of 2023/24, compared to EGP 357.87bn in the same period of 2022/23, which increased expenses to EGP 1.258trn from EGP 808.52bn, while budget revenues increased to EGP 608.96bn, compared to EGP 463.95bn.
