The Ministry of Finance launched its citizen bonds last week, a first for the ministry, targeting individual investors. The bonds are available for purchase nationwide through Egypt Post and are open for subscription until 8 March.
The bonds have a maturity of 18 months and offer a fixed annual yield of 17.75 per cent, paid monthly, net of taxes.
The overall value of subscriptions for the bonds since they were introduced on 22 January and until 1 March amounted to LE2 billion, according to different media outlets.
They allow individuals to lend to the government without going through the banking system, as is the case with regular treasury bills and bonds. Subscriptions start at LE10,000, with a maximum of LE30,000.
“The citizen bond seeks to capitalise on the expanding base of individual investors in the market in order to diversify domestic debt-financing sources and introduce new liquidity channels into treasury instruments,” said Israa Ahmed, a macroeconomic analyst at Thndr Securities Brokerage.
“The bond serves as a savings vehicle and a fixed-income investment tool that can help absorb liquidity resulting from the maturity of some savings certificates, including high-yield certificates of deposit issued two years ago,” she said.
Ahmed expects the bonds to attract strong demand given their comparatively high rate of return relative to existing savings instruments, which are likely to see further reductions in interest rates over the course of the year.
The bonds are being issued at the same time as many people are redeeming bank certificates issued two years ago by the National Bank of Egypt (NBE) and Banque Misr. The high-yield certificates had attracted around LE1 trillion, with annual returns of 27 per cent and monthly returns of 23.5 per cent.
Ahmed noted that the citizen bonds, alongside the availability of treasury bills and bonds for individual trading on the Egyptian Stock Exchange, reflect the government’s desire to diversify and broaden the base of investors in local debt.
The ministry said in its announcement introducing the bonds that the new offering promotes financial inclusion. However, it appears that the bond was also launched with the aim of bypassing the banking system and absorbing household liquidity at a lower cost than institutional debt instruments.
At present, yields in the secondary market for treasury bills range between 22 and 25 per cent. Through the new bonds, however, the Ministry of Finance is offering individual investors a lower net return of 17.75 per cent, helping to reduce average borrowing costs.
Ahmed believes that if the government succeeds in attracting substantial funds through the bonds, it could reduce the interest it pays under the traditional borrowing model, which relies on banks as primary dealers, by around three per cent.
The key challenge, she added, lies in the extent to which people will be attracted by this new instrument, as well as in diversifying government debt sources so that financing is not dependent on the banks investing in sovereign debt instruments.
Mohamed Hassan, managing director of Alpha Financial Investments Management, said that the banks lend to the government by buying treasury bills and bonds at relatively high interest rates.
Even when individuals purchase bonds issued by the ministry, the banks typically act as intermediaries and secure a return. Through the new citizen bond mechanism, he noted, the ministry can reduce borrowing costs by around 2.5 per cent.
Egypt’s budget deficit grew during the first five months of the current fiscal year (July-November 2025), reaching 3.6 per cent. This was driven largely by debt-servicing costs, which consumed around 96.4 per cent of total revenues and remained the heaviest burden on the budget.
The monthly report issued by the Ministry of Finance at the end of December revealed that debt interest payments rose by 45.2 per cent, reaching LE1.06 trillion. This pushed the overall deficit to 3.6 per cent of GDP, compared with 3.1 per cent during the same period of the previous fiscal year.
Last week, the Ministry of Finance completed the preparation of its debt-management strategy and presented it to the cabinet ahead of its official launch. The strategy is based on two main pillars aimed at reducing both domestic and external debt.
It seeks to extend the average maturity of local debt to five years and includes plans to issue domestic sukuk (Islamic bonds), retail bonds, and long-term financial instruments, alongside variable-interest bonds.
It also seeks to implement buyback and swap operations in the domestic market, with annual updates designed to ensure a reduction in the debt-to-GDP and debt-service ratios to below 70 per cent by 2030.
In buyback operations, governments repurchase their own outstanding bonds before maturity to reduce the amount of debt coming due and to potentially retire expensive debt. Swapping allows governments to exchange existing bonds for new ones with different terms.
The strategy further aims to reduce the reliance on commercial financing and expand concessional financing in the local currency.
The Ministry of Finance has launched the new citizen bonds to lower debt-servicing costs, which had become extremely high, in some cases exceeding the debt itself, by borrowing at a lower cost, Hassan said.
Many individual investors may find the new bonds an attractive opportunity for subscription, particularly as the Central Bank of Egypt (CBE) moves towards lowering interest rates amid expectations that they will go down to eight per cent in 2026.
The CBE cut interest rates by one per cent at the first Monetary Policy Committee (MPC) meeting of 2026, bringing the deposit rate to 19 per cent and the lending rate to 20 per cent.
The ministry aims to attract at least five per cent of individual savings in the banks through the new citizen bonds. Individual savings make up about 60 per cent of the overall banking sector.
The initiative is also part of a strategy to rebalance the base of government debt holders and reduce the reliance on the banks and major financial institutions, according to an official who requested anonymity.
* A version of this article appears in print in the 5 March, 2026 edition of Al-Ahram Weekly
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