CAIRO: The Central Bank of Egypt (CBE) on behalf of the Ministry of Finance is set to auction 7 billion EGP ($980.04 million) in treasury bills Thursday in order to fill a soaring budget shortfall, according to the bank’s official website.
The T-bills were scheduled to be offered in two installments: the first valued at 1 billion EGP with a six-month term, and the second worth 4 billion EGP with a one-year term.
Earlier in October, the Ministry of Finance announced plans to borrow 214 billion EGP in treasury bills and bonds during the second quarter of the current fiscal year, marking a 3.6 increase from a total of 206.5 billion EGP in the same period during the previous fiscal year that ended June 30.
Egypt’s government intends to borrow 455 billion EGP during the current fiscal year.
President Abdel Fatah al-Sisi previously ratified a revised and tightened budget for FY 2014-2015 in a move towards applying tough austerity measures.
The deficit was reduced from 292 billion EGP in the initial budget draft to 240 billion EGP, which amounts to 10 percent of GDP, compared to a 12 percent of GDP deficit for FY 2013-2014.
However, Minister of Finance Hani Kadry said the budget deficit is estimated to surge to 11 percent of GDP this fiscal year, citing the government’s commitment to pay interest on the Suez Canal investment certificates.
In an attempt to control the deficit, the Cabinet decided to cut energy subsidies, raising the prices of petroleum products from between 40-78 percent for petrol and 175 percent for natural gas.
The government has also mulled new taxes, such as mortgage taxes, a 5 percent tax on those who earn more than 1 million EGP annually and a 10 percent tax on stock market profits and dividends.