CAIRO: The Central Bank of Egypt (CBE) is set to auction 5 billion EGP ($709.73 million) in treasury bills Sunday, amid ongoing efforts to fill a soaring budget deficit, 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 billion EGP with a nine-month-term, CBE announced.
Egypt’s economy faced dramatic troubles since former President Hosni Mubarak’s resignation in the wake of the January 25 Revolution, registering a budget deficit of over 240 billion EGP during the previous fiscal year (2012/13.)
The government resorted to borrowing 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.
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.
Businessmen, however, complained of the difficulty in getting loans to finance their projects and investments amid the government’s increased borrowing from banks, triggered by the economic turmoil.
But banks tend to lend to the government, which they consider as a safe haven with guarantees of timely repayment and higher interest rates than retail lending.
Egypt’s budget deficit could reach 14.5 percent of Gross Domestic Product (GDP,) totaling between 340 to 350 billion EGP in the fiscal year (2014/15) if economic reforms are not applied but it may fall to 10 percent if such reforms are applied, according to MOF.
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.