Experts have described the government’s move offering bonds abroad as a part of efforts to revive international financial institutions’ confidence in the Egyptian economy.
This comes in light of Moody’s recent report which amended Egypt’s economic outlook to optimistic.
Egypt plans to offer dollar bonds abroad during the first quarter of 2015, with a value ranging between $1-1.5bn, according to Finance Minister Hany Kadry Dimian.
Former finance minister Momtaz El-Saeed said: “If the offering is successful over a short period, it will represent a great testimony for the Egyptian economy.”
He added that the US Secretary of Treasury’s visit to Egypt at this time may be a message of significant guarantees for the Egyptian economy from friendly countries or financial institutions.
Foreign investments during three quarters of fiscal year (FY) 2013/2014 reached $3.7bn.
According to Central Bank of Egypt (CBE) governor Hisham Ramez, Egypt plans to repay a $2.5bn Qatari deposit by mid-November.
During October, Egypt deposited $500m to Qatar.
According to a report issued by the Central Bank of Egypt, monetary reserves reached $16.8m during September.
El-Saeed declared that there are high hopes for an ongoing recovery of Egyptian economy, especially through Suez Canal imports, tourism, and increased money transfers from workers abroad.
According to Dimian, the government is targeting a growth rate of up to 3.5% for FY 2014/2015 compared to 2.2% for FY 2013-2014.
Banking expert Ahmed Adam, said that there are three scenarios for payment, especially for debts due to Qatar. He said the first scenario concerns arrangements with Gulf countries or international financial institutions to purchase the bonds during the first and second quarters. The second involves Gulf countries depositing money in the bank, with the third entailing offering treasury bills in dollars domestically.
Adam says that offering bonds abroad helps to create an important promotional reputation for the Egypt economy during this phase, which is essential until the security situation on the western and eastern borders is settled.
Adam revealed the advantages of offering bonds abroad, explaining that interest rates do not exceed 1% while interest for domestic bonds can reach 3%.