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Egypt borrows $970m to cover budget deficit

August 10, 2015 at 10:04 am

The Central Bank of Egypt has revealed that the ministry of finance borrowed 7.5 billion Egyptian pounds (around $970 million) in treasury bills on Sunday to cover the budget deficit.

According to the bank’s website, the first batch of treasury bills is valued at 3 billion Egyptian pounds (around $338 million) over a 91-day term. The second has a value of 4.5 million Egyptian pounds ($582 million) with a 273-day term. Treasury bills are short-term securities with a maturity term that varies between 3 to 6 months.

The ministry of finance borrows by auctioning bonds and treasury bills at different terms to cover the budget deficit. The biggest purchasers tend to be Egypt’s public banks.

Overall, the budget deficit is estimated to reach 251.1 billion Egyptian pounds ($32.48 billion) by the end of fiscal year 2015/2016, making up 8.9 per cent of the country’s GDP.

Statements from the ministry confirm that the overall deficit reached 261.8 billion Egyptian pounds –10.8 per cent of GDP – in 11 months from July to May of 2014/2015, compared to 189.4 billion Egyptian pounds (9.5 per cent of GDP) in the same period in the previous year.

The exchange rate quoted by the Central Bank of Egypt for these statistics is $1 US = 7.73 Egyptian pounds.