File Photo: Finance Minister Amr El-Garhy at a news conference in Cairo, Egypt 11 August, 2016 (Photo: Reuters)
Egypt’s budget deficit registered 5.1 percent in the first half of this fiscal year relative to Gross Domestic Product (GDP) down from 6.2 percent in the first half of last year, the country's finance minister announced Sunday.
In a press conference reported by state news agency MENA, Amr El-Garhy said that the government targets a budget deficit of 10.1 percent by the end of the current fiscal year 2016/17, down from 12.2 percent in 2015/16.
He said that the government would start its promotional tour to issue $2-2.5 billion in dollar-denominated Eurobonds in the global bond market Tuesday, adding that the tour will include the UAE, the US and the UK, the bonds to be all placed by 25 January.
El-Garhy highlighted that there is great investor appetite to purchase the dollar-denominated Eurobonds.
The finance ministry announced in August that four international investment banks — the French bank Natixis, Citibank, JP Morgan and BNP Paribas — were selected by Egypt to issue the dollar-denominated Eurobonds.
The bonds could produce a yield of 6-6.5 percent.
During the press conference, Deputy Finance Minister Ahmed Kouchouk said that the tour includes up to 80 to 100 banks to discuss the Eurobonds, saying it also aims to promote Egypt's reform programme.
Kouchouk added that Egypt received over $1 billion over the last two months of foreign investment in governmental debt tools, after floating the Egyptian pound.
Egypt freely floated its currency against the dollar in November, as part of its fiscal reform programme implemented since mid-2014 in an attempt to curb a growing state budget deficit
The reform programme, which also includes cutting subsidies and implementing new taxes, including the value added tax (VAT), was endorsed by the International Monetary Fund (IMF), leading to the Central Bank of Egypt (CBE) receiving an initial $2.75 billion from a three-year $12 billion loan.
El-Garhy said that revenues increased by 14.5 percent to EGP 220 billion in the period from July to December of the current fiscal year compared to EGP 192 billion in the same period of last year, attributing the revenue increase to the new VAT that has replaced the old sales tax.
According to El-Garhy, the ministry will finish the bylaws on VAT in the upcoming two weeks.
Egypt's economy has been struggling since the 2011 uprising, with a sharp drop in tourism and foreign investment — two main sources of hard currency for the import-dependent country.