Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Further Funding From IMF Not Needed, Finance Min.


Fri 30 Nov 2018 | 02:09 AM
Yassmine Elsayed

CAIRO, Nov. 30 (SEE)  - Finance Minister Mohamed Maait told Bloomberg that Egypt won’t ask for further funding from the International Monetary Fund when its $12 billion program expires next year but it is open to maintaining a looser relationship with the multilateral lender to reassure investors.

[caption id="" align="alignnone" width="800"] Photographer: Sima Diab/Bloomberg[/caption]

“We are now in a position that we don’t think we will need further funding from the IMF. That is number one,” Maait said  at his office in Cairo. He added that there “could be some sort of cooperation” with the Washington-based lender but “let me say again and stress again that this does not mean we’re going to ask for further financing.”

Egypt liberalized its currency regime in November 2016, helping to secure the IMF loan to support an economic overhaul that aimed to cut the budget deficit to 8.1 percent of gross domestic product by mid-2019. The government has largely stayed the course.

The government has embarked on a multi-pronged plan to reduce debt and is taking steps to make itself more attractive to institutional investors.

Maait confirmed Egypt was seeking inclusion in JPMorgan Chase & Co.’s emerging market bond indexes to boost inflows from overseas institutional investors to its domestic debt market, following similar steps by Saudi Arabia and four other Gulf countries.

The government was also nearing agreement with Belgium-based Euroclear, which settles transactions in securities in dozens of countries, to clear its domestic debt transactions, making it easier for foreigners, who currently have to go through a local bank, to invest in Egyptian-pound denominated debt.

“We are taking steps. We hope that by April we’ll be ready and in the new financial year all our local and domestic debt issuances will be Euroclearable,” he said. “To be included in the JPMorgan index might take longer, but if we can also finish it by 30 June 2019 it would be a fantastic news for us because we think these tools will help us to reduce the cost of borrowing.”

Egypt has sold more than $13 billion in foreign-currency denominated bonds since it liberalized the currency in 2016. Its first euro-denominated bond, issued in April, was oversubscribed.

Maait said the government would go to the market again in early 2019 but could look to persify into yen and yuan-denominated debt. The government is also expecting to issue its first green bonds, linked to environmental projects, in the 2018-19 financial year ending in June but was unlikely to launch its first Islamic bond, or sukuk, until the following year.

Egypt is also considering issuing international bonds denominated in local currency, he said. “We will persify countries, we will persify currencies and we will persify products."