Central Bank of Egypt. (Reuters)
Egypt’s debt instruments attracted EGP 41.8 billion in four auctions, figures released by the Central Bank of Egypt (CBE) showed.
On Sunday, the CBE offered two types of treasury bills (T-bills) in Egyptian pound in an auction, including a 91-term T-bills and 273-term T-bills with targeted investments of EGP 19 billion.
The two types drew in around EGP 20 billion with interest rates averaging 12.4 percent and 13.4 percent. Some 259 bids out of 398 were accepted.
On Thursday, the CBE offered two T-bills types in Egyptian pound, including 364-term T-bills and 182-term T-bills with targeted investment of around EGP 18 billion.
The two types attracted EGP 21.5 billion with interest rates ranging from 13 percent to 13.9 percent through 290 bids that were accepted out of 439.
T-bills are an investment instrument that the country offers to secure money to repay its internal and external debts.
In February, the government announced a policy to curb public debt to GDP ratio to 87 percent in FY 2020/2021, 84 percent in FY 2022/2023, and 79 percent in FY 2023/2024.
The policy includes a medium-term debt management strategy that focuses on reducing debt services, prolonging its period, and improving government security in markets. The goal is to expand the investors' base which will, in turn, provide the required liquidity to support the budget.
According to this strategy, the external debt trajectory will be set in accordance with the expected cash inflows to the country to a maximum of 37 percent of GDP, which will be put on a downturn path per year, with the aim of decreasing the external debt to GDP ratio to below 30 percent over the medium term.
Furthermore, the strategy aims at decreasing public debt to GDP ratio to about 70 percent over the coming four years and putting a cap on loans obtained through external bodies over the same period, said Finance Minister Mohamed Maait.
The strategy includes settling a portion of debts by exchanging them with unique state-owned assets. The aim is to reduce public debt by EGP 100 billion annually in the coming four years, Maait clarified.
Egypt’s external debt grew by 11.2 percent in the first nine months of 2020 to reach $125.3 billion by the end of September 2020, up from $112.6 billion in December 2019, according to the CBE.