Cairo, Asharq Al-Awsat—Hamdi Samir, adviser to the minister of finance for public debt affairs has said the plan to issue Egyptian bonds in favor of Qatar has been temporarily postponed due to the unrest in the country, adding that only the date of the issue will change.
Soon after the ouster of Mubarak, Qatar offered Egypt USD 8 billion, including USD 1 billion as a grant, and another USD 5.5 billion as a deposit in the Central Bank to be used to pay for the treasury bonds for Qatar.
Samir told Asharq Al-Awsat that Egypt was going ahead with converting Qatari deposits into bonds according to a previous agreement between both sides. He denied any inflexibility on the part of the Qatari officials and added that “communications are ongoing and have not been disrupted, and we have no issues at all.”
The Egyptian government offered USD 3.5 billion in bonds from the Qatari financial package to the Qatar National Bank, of which USD 2.5 billion was offered in May at an annual interest rate of 4.25 percent, and USD 1 billion in early July at an annual interest rate of 3.5 percent.
Samir said the postponement was due to the fact that “it was planned for Egypt to offer bonds to the Qatari government in two installments, one in August, and a second in September, for the value of USD 1 billion. Each issue needs one month of preparation before it is completed, where the August issue for instance, would need to be worked on from the start of July, because of too many administrative and legal issues. After the June 30 revolution, we will not be able to make the preparations for this issue, due to the circumstances in the country.”
Since the ouster of Mohamed Mursi, Saudi Arabia, UAE and Kuwait announced financial aid packages worth USD 12 billion for Egypt. The Egyptian Central Bank received USD 5 billion last month, and the aid packages helped improve the Egyptian economic outlook. Credit rating institutions did not reduce Egypt’s rating due a stable future outlook, and demand increased, especially among foreigners, for government bonds and treasury bills, while their yield dropped.
Samir expects the yield to remain unchanged on the international bonds offered by Egypt to Qatar on the international market. He said world markets were different to the local market, especially regarding the risks surrounding Egyptian economy. He added: “I expect the yield on the next bonds to be the same as the last issue, which was 3.5 percent.”
The Egyptian government is hoping to introduce some economic reforms. However, the government, which took the oath in the middle of July, has yet to announce its economic plan.
Egypt has experienced an increasing budget deficit in the first 11 months of the current financial year, reaching USD 29 billion, representing 11 percent of GDP, due to the large increase in spending. The national debt has reached unprecedented levels, with the figure for foreign debt last March reaching USD 38 billion, representing 12.9 percent of GDP.