A rise in tax revenues observed on the proceeds of treasury bills (T-Bills) and bonds (T-Bonds) registering EGP 36.12bn from July 2018 to March 2019, against EGP 30.83bn in the same period last year, up by 17% year-over-year, a report issued by the ministry of finance revealed on Wednesday.

According to the ministry, Egypt’s total tax revenues during the first nine months of the current fiscal year (FY) amounted to about EGP 468.4bn, up from EGP 403.2bn during the same period in the previous FY.

The government borrowed EGP 1.82tn through T-Bills and T-Bonds in 2018 and EGP 473.75bn in the first quarter (Q1) of 2019.

According to the ministry of finance, the volume of outstanding balances of T-Bills and T-Bonds is in local currency until the end of April 2019 reached EGP 1.85tn, including EGP 1.151tn of T-Bills and EGP 701.18bn of T-Bonds.

Banks working in the Egyptian market are considered the largest investors in T-Bonds and T-Bills, which the government issues on a regular basis to cover the state’s budget deficit.

T-Bonds and T-Bills are proposed through 15 banks, which are the principal dealers in the primary market. These banks resell a portion of these T-Bills and T-Bonds in the secondary market to retail investors, as well as to local, and foreign institutions.

While banks are investing in government debt instruments to invest a large part of their domestic liquidity, there is strong expectation of drop in investment following the November decision by the ministry of finance, which amended the system of tax calculation on investing in debt instruments and angered many of investors.

Investment banks and multiple research centres have expected banks to cut their investments in government debt instruments following the adoption of the resolution to reduce their financial burdens and move more towards direct lending to customers.