Egypt Initiates Negotiations With India for Rupee-Denominated Bonds: Finance Minister

Egypt has initiated negotiations with India to explore the possibility of issuing rupee-denominated bonds in the Indian markets, Minister of Finance Mohamed Maait said during a press conference.

This move reflects Egypt's commitment to diversifying its external debt portfolio by exploring various international markets, Maait added.

He further outlined Egypt's strategic plan to expand its debt portfolio beyond conventional bonds, as it issued green bonds, Chinese Panda bonds, Japanese Samurai bonds, and sovereign bonds.

Explaining the rationale behind borrowing in the currencies of these specific countries, Maait cited China as Egypt's primary exporter, making it a logical choice for borrowing in Chinese currency to cover import operations.

Egypt has already established a presence in the Japanese market by issuing three yen-denominated bonds, with each issuance valued at $500 million, having the first bond released in March 2022, followed by subsequent issuances in August and November.

In October, Egypt issued its first sustainable Panda bonds in the Middle East and North Africa region, valued at ¥3.5 billion ($500 million) with a yield of 3.5 percent over three years.

Earlier in 2023, Egypt successfully tapped into the US market by issuing its inaugural US-denominated sovereign Islamic bonds, valued at $1.5 billion, which attracted a fresh base of investors from the markets of the Gulf Cooperation Council, Europe, and the US.

Egypt’s inflation rates are projected to decline during 2024, Maait said, highlighting the country's extensive efforts to tackle the economic repercussions of various crises.

Despite grappling with the adverse impacts of the COVID-19 pandemic, the Russia-Ukraine conflict, and the war on Gaza, Egypt's intensive efforts are expected to yield positive results, Maait noted.

The Egyptian economy has endured a series of severe challenges in recent times, with the aforementioned crises exerting considerable strain on economies worldwide, resulting in a marked increase in inflation rates.

However, he expressed optimism that Egypt's economy is poised to embark on a downward trajectory in terms of inflation rates, owing to the government's relentless efforts to address the prevailing economic conditions.

Since the beginning of 2023, Egypt’s annual headline inflation rates have taken an upward trend, reaching their highest level in September at 40.3 percent; then they began to decline in October, recording 36.4 percent in November, according to the data released by the Central Agency for Public Mobilization and Statistics (CAPMAS).

Enhancing private sector’s role Maait also noted that the government is intensifying efforts to enhance the private sector’s role in the economy, by providing incentives and facilities to launch new projects in addition to tax facilities and export incentives.

Moreover, the government is working to promote the private sector’s role and contribution to the national economy to 65 percent in the next few years from the current 30 percent, Egypt's Prime Minister Mostafa Madbouly said in August.

Maait continued that the government, led by Madbouly, attaches importance currently to implementing its IPO programme, which aims to offer 35 state-owned companies to strategic investors by the end of June 2024.

Initially, a list of 32 companies was released, with three additional companies – Eastern Company, Al Ezz Dekheila, and Telecom Egypt – being included later in 2023.

However, the programme's implementation was delayed, particularly regarding the offering of seven state-owned hotels, petrochemical companies, and Wataniya fuel stations, which were scheduled for IPO by the end of 2023.

The Egyptian authorities are now intensifying efforts to expedite the programme’s implementation.

Nonetheless, Egypt collected $5 billion from the programme thus far, aiming to finalize an additional $5 billion in deals by mid-2024, for collecting $2.27 billion in additional revenues during FY2023/2024.