CBE prepares to announce foreign reserves, auctions 5.5B EGP Sunday
Central Bank of Egypt -YOUM7 (Archive)

CAIRO: The Central Bank of Egypt is scheduled to auction 5.5 billion EGP (U.S. $784.87 million) in treasury bills Sunday, amid preparations to announce Egypt’s foreign reserves as of the end of April within a few days, according to CBE’s official website.

The bills are scheduled to be offered in two installments; one valued at 2 billion EGP with a three-month term, and the second worth 3.5 billion EGP with a 266-day term, said the CBE.

Egypt’s foreign reserves edged up U.S. $113 million to register U.S. $17.420 billion at the end of March, compared to U.S. $17.307 billion in February, Hisham Ramez, CBE Governor said in an interview with CBC channel early last month.

Egypt’s foreign reserves steadily declined in the wake of the political and economical turmoil following the January 25 Revolution which toppled former President Hosni Mubarak, with an average of U.S. $13.5 billion in 2013, compared to an average of U.S. $36 billion before 2011.

Foreign reserves improved due to the U.S. $12 billion aid pledged to Egypt by the UAE, Saudi Arabia and Kuwait following the ouster of President Mohamed Morsi on July 3.

Egypt has faced major economic troubles since Mubarak’s ouster, registering a budget deficit of over 240 billion EGP during the previous fiscal year (2012/13).

The government has borrowed from banks operating in Egypt to cover the budget deficit, which is expected to range between 11 to 12 percent, at 200 billion EGP, by the end of the current fiscal year 2013/14, according to Minister of Finance Hany Kadry.

Further, the government plans to borrow 205 billion EGP in treasury bills and bonds during the 4th quarter of the current fiscal year (2013/2014), including 79 billion EGP in April, according the ministry’s schedule of government securities.

However, businessmen have complained of difficulty in getting loans to finance their projects and investments amid the government’s increased borrowing from banks, triggered by the economic turmoil that followed the January 25 Revolution.

Banks tend to lend to the government, which they consider as a safe haven with guarantees of repayment on time and at higher interest rates than retail lending.

Egypt’s budget deficit is currently funded by CBE treasury bills and bonds, one of the government’s instruments for debt, as well as aid from Gulf States and international loans.

Additional reporting by Ahmed Yacoub.

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