Government borrows 6.2B EGP in T-bonds Monday
Central Bank of Egypt Chairman Hisham Ramez - YOUM7 (Archive)

CAIRO: The Central Bank of Egypt (CBE) on behalf of the Ministry of Finance is scheduled to auction 6.250 billion EGP ($819.39 million) in treasury bonds Monday, according to the bank’s official website.

The T-bonds are scheduled to be offered in three installments: the first valued at 1.5 billion EGP with an 18-month term, the second worth 3 billion EGP with a three-year term, and the third valued at 1.75 billion EGP with a seven-year term.

Egypt’s government intends to borrow 455 billion EGP during the current fiscal year, to filling a soaring budget deficit that widened to 186 billion EGP around 8 percent of GDP during the first eight months of FY14/15 (to end June 30,) up from 124 billion in the same period last year, according to Finance Ministry’s monthly report.

The wider deficit was mainly attributed to a delay in settling taxes of the Egyptian General Petroleum Corporation (EGPC) and a decline in grants.

Egypt’s overall budget deficit was estimated at 14 percent of GDP for FY 2014-2015, before President Abdel Fatah al-Sisi ratified a revised and tightened budget in July with an estimated 10 percent shortfall, in a move towards applying austerity measures.

Sisi raised fuel prices as energy subsidies were slashed in the revised budget to 100.3 billion EGP, compared to 144 billion EGP in the previous year, saving around 44 billion EGP.

The government has said it plans to remove energy subsidies completely within three to five years, without affecting the low-income class.

Egypt’s fuel subsidy bill amounted to 44.7 billion EGP ($5.85 billion) in the 1st half of this fiscal year, Ministry of Finance announced last week.

In a February report, Fitch Ratings said that subsidy reforms in Egypt along with lower oil prices were a contributory factor to the recent upgrade of the country credit rating to “B” from “B-” in December, with a “stable” outlook.

“Oil importers are benefiting from lower prices through reduced import bills and lower fuel subsidy costs… Egypt is a small net importer, but spent around 6 percent of GDP on fuel subsidies in FY14 (to end June,)” Fitch said.

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