The government borrows through bonds and treasury bills over different periods of time, and government banks are the largest purchasers of them.
The banks operating in the Egyptian market are the largest sectors investing in bonds and treasury bills, which the government periodically offers to cover the state's general budget deficit.
The Ministry of Finance revealed that the volume of outstanding balances of local treasury bills and bonds amounted to about LE 4.44 trillion by the end of March 2023.
According to the latest report published by the ministry on its website, the volume of outstanding balances of treasury bills amounted to about LE 1.96 trillion, with about LE 957.813 billion for 364-day term, about LE 204.706 billion for 273-day term, and about LE 429.442 billion for 182-day term, in addition to about LE 369.892 billion for a 91-day term.
This comes as the volume of outstanding balances of treasury bonds at the end of March amounted to approximately LE 2.484 trillion, of which about LE 239.625 billion in “zero coupon” bonds, and about LE 14.635 billion in “variable-yield” bonds that the Ministry of Finance recently started offering.
The Monetary Policy Committee (MPC) decided, in March, to raise the Central Bank of Egypt’s (CBE) interest rates by 2 percent. The overnight deposit rate, overnight lending rate, and the rate of the main operation were raised by 200 bps to 18.25 percent, 19.25 percent, and 18.75 percent, respectively.
The discount rate was also raised by 200 bps to 18.75 percent.
Egypt is witnessing an inflationary wave that has been accelerating almost every month since the beginning of 2022, as a result of the high costs of importing energy and food, due to the Russian-Ukrainian crisis, and the Corona epidemic crisis.