CAIRO: The Central Bank of Egypt (CBE) is set to auction 6 billion EGP ($839.09 million) in treasury bills Thursday to fill a soaring budget deficit, according to CBE’s official website.
The bills are scheduled to be offered in two installments, the first valued at 2.5 billion EGP with a six-month term and the second worth 3.5 billion EGP with a 357-day term.
Egypt’s budget deficit reached 189.4 billion EGP, around 9.3 percent of GDP, during the first 11 months of the fiscal year 2013/14, compared to 204.9 billion EGP, 11.7 percent of GDP, during the same period in the previous FY, the Ministry of Finance (MOF) stated in its Economic Performance Report for July.
Earlier in July, MOF declared intending to borrow 220 billion EGP in treasury bills and bonds during the first quarter of the current fiscal year, compared to 204.8 billion EGP in the 4th quarter of the last fiscal year that ended on June 30.
President Abdel Fatah al-Sisi ratified a revised and tightened budget for the 2014/15 fiscal year, in a move towards applying tough austerity measures.
The deficit was reduced from 292 billion EGP ($40.83 billion) in the initial budget draft to 240 billion EGP which amounts to 10 percent of GDP, compared to an expected 12 percent deficit for the 2013/14 fiscal year.
In an attempt to control the deficit, the Cabinet decided to cut energy subsidies, raising fuel prices by 40 percent to 78 percent for petrol and 175 percent for natural gas.
The government has also mulled new taxes like the mortgage taxes, the 5 percent tax on those who earn more than 1 million EGP annually, in addition to a 10 percent tax on stock market profits and dividends.