Egypt signed on Saturday an agreement "Term Sheet" with Euroclear to link the issuance of Egyptian government debt, in the local currency, with the bank.
Under the agreement, Euroclear will allow Egyptian government debt instruments to be dealt with by a larger segment of foreign investors, especially central banks, which are characterized by high activity, volume and value of investments including long-term government securities.
This came on the sidelines of the fall meetings of the International Monetary Fund (IMF) and the World Bank (WB) in Washington, DC. The signing ceremony was attended by the Central Bank of Egypt (CBE) Governor Tarek Amer and members of the Egyptian Embassy in Washington.
The Minister of Finance Mohamed Maait said that the government is firmly on the path of economic reform, that it is working to achieve financial targets, including the reduction of government debt rates in accordance with the strategy laid down since 2017.
He added that this agreement comes as a continuation of the memorandum of understanding (MoU) signed with the Bank last April.
He added that the linkage with Euroclear contributes to reducing the cost of servicing Egypt's public debt. "This agreement will help new investors to enter the government securities market in Egypt and attract the investments of international central banks for Egyptian securities to invest in local fixed income instruments," Maait noted.
He pointed out that the Ministry will be able to expand the base of international investors and facilitate access to Egyptian government securities; especially in light of the high demand for Egyptian sovereign debt.
He added that this agreement will allow the market to maintain a large volume of liquidity, and lead to a decline in the cost of borrowing, thus reducing the return on the debt bill, and increase the local liquidity of assets.
Deputy minister of finance for financial policies and institutional development, Ahmed Kajuk hinted that the agreement would persify the sources of financing budgetary needs as part of the package of economic reform measures, including the implementation of a strategy to reduce the volume of public debt in the medium term.
On his part, Stephan Pouyat is Global Head of Capital Markets and Funds Services at Euroclear said that Egypt is taking steady steps towards economic reform, noting that he is confident that foreign investors will turn to the Egyptian economy.
He added that the provision of liquidity in the local market reduces the cost of debt, which has been achieved with other countries that preceded in this linkage with the bank.
Moreover, Khaled Abdel-Rahman. Deputy Minister of. Finance for Capital Market operations said that this agreement will attract a new segment of specialized investors, who are characterized by the large volume of investments and the long retention period of government securities, leading to increased demand, market stability and the reduction price fluctuations.
It is worth mentioning that the Ministry of Finance has been working to provide all the requirements of Euroclear at all levels, including capital market infrastructure, legislative and legal aspects in addition to the rules of binding.
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