Egypt to Issue $250:$500 million Worth "Green Bonds" in 2019 - Official

By: Yassmine ElSayed

CAIRO, Feb. 23 (SEE) – Deputy Finance Minister Ahmed Kouchouk revealed the government aims to issue between $250 million and $500 million of debut green bonds this year; it additionally plans to sell between $3 billion and $7 billion worth of international debt this quarter.

Speaking to Bloomberg, he explained that the government is

looking to raise the share of longer-dated debt to about 70 percent of annual

domestic issuance by 2022 from 5 percent in the last fiscal year.

In making a “gradual shift” away from short-term T-bills and

toward instruments such as Treasury bonds, “the goal is to push the average

maturity to around five years by 2022, almost double the level in the fiscal

year ended in June,” the added.

 “We used to borrow to

repay both maturing debt as well as to finance new debt,” Kouchouk said. “That

exerted additional pressure on the market and pushed yields upward.”.

According to Kouchouk, Egypt is considering new instruments

such as variable-rate bonds linked to inflation and zero-coupon securities.

Also in the pipeline are international bonds denominated in the local currency.

The average maturity of Egypt’s sovereign debt is on track

to reach 3.5 years by next June, compared with 2.8 years in the last fiscal

year

“We want to persify our debt instruments and currencies

and also our local and international investor base to enhance completion and

secure the best yields,” Kouchouk said. “We already started increasing our net

issuance of T-bonds this fiscal year.”

The Finance Ministry will also work with all relevant

counterparts to improve the primary dealer system to encourage further

liquidity and competition in the market, he said.

In tandem with rethinking its approach to borrowing, the

government is developing a medium-term revenue strategy with the support of the

IMF, a plan it aims to finalize by next June, according to Kouchouk. The

outlook will add clarity to Egypt’s revenue targets and assumptions behind

these goals.

The revenue strategy includes measures to counter evasion

and boost tax collection, as well as widening the revenue base by including

more economic activities and entities, he said.

The objective is to maintain a stable tax policy. Egypt will

also work on ensuring the progressivity of its system by “efficiently” levying

taxes on growing economic sectors, he added.

The plan “would allow us to come up with a consistent and

efficient medium-term reform package on the revenue side that allows us to meet

our fiscal and deficit targets,” Kouchouk said.