Egypt increases size of local borrowing by $3.4 billion

The Egyptian Finance Ministry increased the size of domestic borrowing from public banks by 24.5 billion Egyptian pounds ($3.4 billion) during the first quarter of the fiscal year 2014- 2015, Anadolu news agency reported.

The government borrows locally by selling bonds and treasury bills to Egyptian banks.

Egypt’s President Abdel Fattah Al-Sisi ratified the budget earlier this week after the Egyptian government cut the deficit from 292 billion pounds ($40.8 billion) to 239.9 billion pounds ($33.6 billion), which represents ten per cent of the country’s GDP.

According to official Finance Ministry data, the government will increase its domestic borrowing from 200 billion ($28 billion) to 224.5 billion pounds ($31.4 billion).

A finance ministry official, who requested not to be named, told Anadolu that the government will increase the size of borrowing to fulfil the local market’s need for oil and food and to fund huge salary increases in Egypt.

The government borrowed 11 billion pounds ($1.54 billion) in January after deciding to raise the minimum monthly salaries for public employees to 1,200 pounds ($168), costing the government 20 billion pounds ($2.8 billion) during the new fiscal year.

The official said the government would rely on treasury bills more than bonds to reduce the burden on the banking sector and to ensure the availability of financial liquidity.

The Egyptian government plans to borrow in total 455 billion pounds ($62.2 billion) during the new fiscal year.