File photo: Central Bank of Egypt s headquarters is seen in downtown Cairo, Egypt March 8, 2016 (Reuters)
This is the first US dollar-dominated T-bill tender the CBE has offered since the onset of the Russian-Ukrainian conflict in March.
The tender has attracted 31 offers, of which the CBE has accepted 25.
T-bills are one of the debt financing instruments to which central banks resort to finance international obligations over the short term.
Emerging markets, including Egypt, are expected to lose 30 percent of capital inflows, up from 20 percent projected in October, driven by the Russian war in Ukraine, the International Monetary Fund (IMF) said on Tuesday.
According to IMF projections, Egypt’s debt-to-GDP ratio is expected to rise to 94 percent in the current FY2021/22 amid the ongoing economic challenges, before deaccelerating to 89.6 percent in FY2022/23 and to approach pre-pandemic levels by FY2024/25.
Egypt tops Arab countries in terms of projections of debt-to-GDP ratio in 2022, according to the IMF.
The Russia-Ukraine conflict is having economic repercussions on Egypt including rising financial needs, an elevated rate of inflation, and limited fiscal space, assistant director of monetary and capital markets at the IMF Ranjit Singh told Ahram Online last week.
“While Egypt remains committed to fiscal consolidation over the medium term, several factors are posing pressures on the budget, including the spike in international commodity prices and monetary tightening. This is expected to drive up the cost of government purchases and spending on subsidies and interest payments. Government debt is also expected to increase, including because of the recent currency depreciation and its adverse impact on the valuation of external debt,” the World Bank’s chief economist Roberta Gatti told Al-Ahram Weekly this week.
Egypt is currently in technical discussions with the IMF for a new loan programme to address the impacts of the Ukrainian war that caused a food supply disruption for Egypt, particularly for wheat, as Egypt imports about 80 percent of its wheat needs from Russia (50 percent) and Ukraine (30 percent).
During the launch of the Regional Economic Outlook for MENA event held on Wednesday, IMF Director of the Middle East and Central Asia Department Jihad Azour said that Egypt’s external debt it is expected to increase slightly, as is the case for other peers in the region; however, this rise is not a matter of concern, as the biggest share of this debt is EGP-dominated.