Foreign Purchases of Local Egypt Debt May Reach $11 Billion

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  • Growth in foreign investor interest linked to economic reforms
  • Level would be similar to pre-2011, finance minister says

Egypt sees foreigners buying as much as $10 billion to $11 billion in local Treasury bills and bonds in the coming period, Finance Minister Amr El-Garhy told reporters Sunday.

Government moves to reform the economy and growing investor confidence are underpinning the gradual return to levels achieved before the 2011 uprising that ousted President Hosni Mubarak, he said. Foreign holdings of Egyptian debt rose by as much as $900 million after authorities floated the pound, Deputy Finance Ahmed Kouchouk said in November.

The government issued its forecast ahead of its plan to return to the international bond market to raise $2 billion to $2.5 billion of dollar-denominated bonds. The marketing will begin on Jan. 17, state media reported. El-Garhy told Bloomberg in November that he was eyeing $6 billion of sales in 2017.

Egypt has been paying yields of about 20 percent on domestic T-bonds and T-bills since the central bank raised interest rates on Nov. 3. In addition to dollars, the government may also issue yen- and yuan-denominated bonds as it seeks to reduce costs, the Finance Ministry said last month.

The government also lifted the budget deficit target for the fiscal year that began July 1 to 10 percent to 10.2 percent of gross domestic product, from the previously announced 9.8 percent, El-Garhy said. It was 12.2 percent last year. The ratio dropped to 5.1 percent of GDP in the first half from 6.2 percent in the same period a year ago.