Egypt’s domestic debt sales have grown by an annual 8.2 percent to a record LE216.3 billion (US$30.3 billion) in the first quarter of the 2014/2015 fiscal year, compared to LE200 billion for the same period the previous year, according to the Ministry of Finance’s domestic debt issuance calendar.
The official Finance Ministry data shows the government borrowed LE819.1 billion ($114.6 billion) during fiscal year 2013/2014.
The government borrows locally by selling bonds and treasury bills to the banking sector, to ensure the availability of financial liquidity.
Average yield for one-year treasury bills now stands at 12.41 per cent at an auction on Monday.
Meanwhile, Egypt's gross domestic debt recorded LE1.7 trillion (83.7 percent of GDP) by end of June 2014, compared to LE1.4 trillion (82.4 percent of GDP) by end of June 2013 according to the Financial Monthly Bulletin in August 2014.
Additonally, total government debt (domestic and external) reached LE1.91 trillion (93.9 percent of GDP) at end of June 2014, compared to LE 1.64 trillion (94 percent of GDP) at end of June 2013, the bulletin showed.
External debt recorded $46.1 billion by the end of June 2014 compared to $43.2 billion by the end of June 2013, most of the increase represented aid from the Gulf Countries with concessional and preferential terms, the Bulletin explained.
Financial expert Fathy Issa said that the growth in domestic treasury bill offers was worrying, not to mention the surge in yields which will put more pressure on Egypt’s budget deficit. “Debt service already takes up more than 25 percent of total expenditure," he added.
As a result, Issa said the deficit target in the current fiscal year’s budget is estimated to reach LE240 billion, which represents 10 percent of GDP, and the Government’s expansive fiscal policy will further increase this deficit.
The Ministry of Finance, however, expects that the total government debt (domestic and external) will reach a sum of LE 2.2 trillion at the end of FY14/15 (about 91.5 percent of GDP, decreasing from 93.8 percent of GDP for FY12/13).
