T-bills’ sales are expected to reach $19M in 2018: EFG Hermes

CAIRO – 26 March 2018: Sales of Egyptian treasury bills (T-bills) are expected to reach $19 million in 2018, the same as 2017’s amount, Head of EFG Hermes Ahmed Shams told MENA.

Shams said that the Egyptian government aims to attain between $15 billion and $20 billion in 2018 through those treasury bills.

EFG Hermes excluded an "effective" decline in foreign investors' purchases of Egyptian treasury bills in case the Central Bank of Egypt maintains its policy to reduce interest rates, Shams added.

Shams remarked that foreign purchases of those bills can very well meet the government's needs.

The Monetary Policy Committee of the Central bank of Egypt (CBE) lowered the interest rates by 1 percent in February, for the first time since the November flotation.

The overnight deposit rate now stands at 17.75 percent, down from 18.75 percent. The overnight lending rate is 18.75 percent, down from 19.75 percent.

Pharos Research predicted on Sunday that the Monetary Policy Committee of the Central Bank of Egypt will cut the policy rates by 100 basis points at the next meeting, following the inflation’s decline in February.

The upcoming meeting of the Monetary Policy Committee is scheduled to be held on Thursday March 29.

Fitch Rating expected earlier that inflation in Egypt will fall further this year but remains in double digits, averaging around 13 percent. It is assumed that further subsidy reform in July will lead to energy price increases, especially given higher oil prices.

Fitch anticipated in a report that the central bank will cut rates further this year by potentially another 200-300bps, while maintaining positive real interest rates even as global rates rise.

Generally, T-bills are usually issued every Sunday and Thursday.

For the current fiscal year, the budget deficit is estimated to record LE 370 billion, planned to be financed through treasury bills and bonds and through international and Arab loans.