Egypt's central bank attracts EGP 55.4B in investments during two-day auctions

CAIRO - 27 August 2020: The Central Bank of Egypt (CBE) has attracted EGP 55.4 billion in investments in the four treasury bills (T-bills) auctions held on Sunday and Monday.

The proceeds of the auctions, held on behalf of the finance ministry, are being used to bridge the gap in the state budget deficit, according to Ahram Online.

The last T-bills auction the CBE held on Monday attracted EGP 19 billion, according to the CBE.

The CBE offered on Monday two types of T-bills in Egyptian pounds worth EGP 19 billion, including 91-day yield T-bills at EGP 8.5 billion, and 266-day yield T-bills worth EGP 10.5 billion in order to bridge the state’s budget deficit gap.

The CBE accepted 81 out of 153 bids worth EGP 19.4 billion for the 266-day yield T-bills, and opted for 124 out of 207 bids worth around EGP 20 billion for the 91-day yield T-bills.
Yields on the two T-bills types range between 13.1 percent and 13.8 percent, with a maturity date 18 May 2021 for the 266-day term T-bills and a maturity date 24 November 2020 for the 91-day term T-bills.

Offering T-bills in auctions is an instrument Egypt’s government resorts to to deal with the state’s budget deficit, which grew bigger under the pressure of the COVID-19 crisis to 6.5 percent of GDP in FY 2019/2020, which ended in June, up from 6.2 percent in FY 2018/2019.

In June, Minister of Finance Mohamed Maait said that Egypt's FY 2019/2020 lost about EGP 125 billion in revenues because of the ongoing COVID-19 crisis, adding that the government targeted revenues of EGP 1.1 trillion before the onset of the crisis.

According to an infograph published recently by Egypt's Cabinet Information Centre, the current FY 2020/2021 budget is projected to witness an increase in expenditure of six percent to reach EGP 1.7 trillion, up from EGP 1.6 trillion in FY 2019/2020.

Revenues are also expected to go up by 18 percent to reach EGP 1.3 trillion in FY 2020/2021, up from EGP 1.1 trillion in FY 2019/2020.

The budget deficit is expected to drop by 6.3 percent of GDP, down from 7.9 percent of GDP in FY 2019/2020.