Muhammad Al-Najjar, director of debt instruments at Nair Consulting, said in an interview with Al-Arabiya that the Egyptian government could succeed in borrowing in the global debt markets in the coming period at competitive and appropriate prices, after the approval of the International Monetary Fund, to borrow him.
Al-Najjar added that the interest rate on external borrowing is likely to be in the range of 6-6.5%, which is in line with rates for global changes at present.
Egypt’s central bank said it sold $850 million worth of one-year dollar-denominated Treasury bills at an average yield of 4.649%, compared with a 4.55% yield at the last issue in early December.
The Ministry of Finance, through the Central Bank, resorts to prolonging bonds denominated in dollars or euros, since their validity period is coming to an end, through an auction that is presented to banks.
The director of debt instruments at Nair Consulting Company explained that Egypt is looking to diversify its funding sources and therefore borrows in Egyptian pounds and dollars in the local market, saying: “The local dollar deposit is renewed every 3 months, and yesterday, on Monday, the rollover took place at interest at a rate of 4.6%, for about $850 million.”
He added that the most important reason for extending the dollar deposit is the government’s inability to meet dollar requirements at present, and the amount for local banks is low.
He pointed out that the task of the Egyptian government is to borrow funds in foreign markets in foreign currency.
“The Egyptian government has borrowed about £5.5 billion this week, as well as about $850 million in foreign currency,” al-Najjar said.
He said Egyptian banks are eager to get higher rates, especially as the interest rate hike at the latest meeting of the Central Bank’s Monetary Policy Committee by 300 basis points, close to 18%, has sent banks messages of increased treasury yields. bills, prompting them to demand higher interest rates, which peaked at 28%.
“I think the struggle between the government and investors at the local level will continue until they are forced to borrow at an expected interest rate in the range of 22-22.5%,” said director of debt instruments at Nair Consulting.
He continued: “I expect the Central Bank of Egypt to continue raising interest rates to 20% in the first quarter of this year.”