The Egyptian government intends to borrow more than $43 billion in the first quarter of FY23

The Egyptian Ministry of Finance aims to offer 52 issues of Treasury bills (T-bills) worth EGP 686.5 billion and 39 bond issues worth EGP 131.5 billion from July 1 to September 30, 2022.

Data obtained by Daily News Egypt revealed the government’s intention to borrow EGP 818 billion in the local market during the first quarter (Q1) of the financial year 2022/23, in a bid to finance the budget deficit of State.

The Central Bank of Egypt, which undertakes this task on behalf of the government, will issue treasury bills and bonds worth EGP 251 billion in July, followed by other issues worth EGP 315 billion. EGP in August, and issues worth EGP 251 billion in September.

According to the plan, the ministry is expected to issue bids worth EGP 188 billion for 91 days, EGP 192 billion for 182 days and EGP 100.5 billion for 273 days, while it is planned to offer 364-day treasury bills worth EGP 206 billion.

The Ministry of Finance has also significantly stepped up the supply of short-term bonds, as it plans to issue zero-coupon bonds, for 1.5 years, worth EGP 94 billion. .

The ministry also plans to offer 3-year bonds worth EGP 26.5 billion, 5-year bonds worth EGP 6 billion, 7-year bonds worth of EGP 3.5 billion and 10-year bonds worth EGP 1.5 billion.

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 budget deficit.

These bonds and notes are offered through 15 banks that participate in the primary dealer system in the primary market, and these banks resell some of them in the secondary market to individual investors and local and foreign institutions.

In the same context, the Ministry of Finance disclosed that the volume of outstanding balances of Treasury Bills and Domestic Treasury Bonds reached around EGP 3,830,000,000 in May 2022.

According to the latest report published by the ministry on its website, the volume of outstanding treasury bill balances up to the end of May amounted to about EGP 1.374 billion, of which EGP 858.77 billion was in bonds at 364 days, 313.880 billion EGP in 273 days. invoices, EGP 115.252 billion in 182-day invoices and EGP 86.627 billion in 91-day invoices.

According to the Ministry of Finance, tenders for treasury bills amounting to approximately EGP 81.8613 billion were due last June, while the rest of the existing tenders are due during the rest of the year in course until May 30, 2023, taking into account that other invoices with the same deadlines are reissued on a periodic weekly basis.

This comes as the Ministry of Finance revealed that the volume of outstanding treasury bill balances reached around EGP 2.455 billion at the end of May 2022, of which around EGP 217.027 billion are “zero coupon” bonds. .

According to the Ministry of Finance, bonds worth EGP 54.586 billion were due in June, while the rest of the bonds are due from August 11 to January 18, 2037, also taking into account that other offers bonds are reissued on a periodic weekly basis.

Finance Minister Mohamed Maait has indicated in his recent statements that the general state budget in the financial year 2022/2023 exceeds EGP 3 billion, pointing out that its total expenditure reached around EGP 2.071 billion, while the estimated total revenue was around EGP 1.518 billion.

Maait said the government aims in the new fiscal year to achieve a primary surplus of EGP 132 billion at a rate of 1.5%, and reduce the total deficit to 6.1% of GDP, from a deficit total of 12.5% ​​in June. 2016, and put the debt ratio on a sustainable downward trajectory to reduce the debt ratio to 84% of GDP against 103% at the end of June 2016, and reduce the debt service ratio to 7.6% of GDP, compared to 10% and 33.3% of budget expenditure, compared to 40% over the past three years, as well as efforts to diversify sources of financing to reduce the cost of development and extend the life of debt .

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