The Central Bank of Egypt (CBE) is set to offer two types of treasury bills (T-bills) in Egyptian pounds on Monday worth EGP 19 billion, including 91-day term T-bills worth EGP 8.5 billion, and 266-day term T-bills worth EGP 10.5 billion in order to bridge the state’s budget deficit gap.
The two types of T-bills will be offered on behalf of the finance ministry.
The maturity date of the 91-day term T-bills is scheduled to be on 24 November 2020, while the maturity date of the 266-day term T-bills is expected to be on 18 May 2021, according to the CBE.
On Sunday, the CBE offered T-bills in Egyptian pounds, on behalf of the finance ministry, worth EGP 20.5 billion over two terms to provide finances for the same purpose.
The first offer was 182-day term T-bills, which managed to attract 166 bids worth EGP 19.17 billion. The accepted bids were 106 with a total of 12.4 billion, which exceeds the required amount estimated at EGP 9.5 billion, according to the CBE.
The second offer was 375-day term T-bills, which managed to attract 200 bids worth EGP 28.88 billion. The accepted bids were 150 at a total of EGP 24 billion, which surpasses the required amount estimated at EGP 11 billion, according to the CBE.
Offering T-bills in auctions is an instrument Egypt’s government counts on to deal with the state’s budget deficit, which was widened under the pressure of the COVID-19 crisis to 6.5 percent of GDP in FY2019/2020, which ended in June, up from 6.2 percent in FY2018/2019.
Egypt’s FY2019/2020 budget deficit recorded EGP 389.1 billion, around $24 billion by the end of May, according to the Ministry of Finance.
In May, Moody’s expected Egypt’s total budget deficit-to-GDP ratio to reach 7.9 percent in FY2019/2020 and to increase to 8.5 percent in FY2020/2021, with the ability of attaining initial surpluses in lower numbers than the targeted rates that were expected before.
Moody’s also projected that Egypt will witness a setback in its domestic growth rates in the short run to under 3 percent in FY2020/2021, with pressures placed on public finance, debt, and payments balance performance.
Moody’s has kept Egypt’s credit rating at B2 with a stable outlook recently, which is the same rating announced in April.