Egypt is expected to secure a spot on JP Morgan’s emerging-market government bonds index by the end of next January, to become one of only two countries in the Middle East and Africa to join this index.
Maait said, in a statement on Sunday, that Egypt is expected to make 14 issuances with a total value of about $26bn, with a share of 1.85% in the index, enabling major investment funds and more foreign investors to invest in Egyptian debt instruments denominated in the local currency.
He added that Egypt’s joining this index will reflect foreign investors’ confidence in the solidity of the Egyptian economy, especially since 90% of surveyed foreign investors supported Egypt’s entry in the index.
He explained that the Ministry of Finance began about three years ago efforts to re-join this index, after its exit in June 2011. Egypt was able to achieve the index’s requirements, including extending the life of government debt, adjusting the yield curve, and raising the percentage of foreign investors’ participation in government financial instruments.
Maait indicated that this step reflects the continuous efforts of the Ministry of Finance to reduce the cost of public debt as part of the package of measures taken by the state for economic reforms, explaining that with Egypt joining the JP Morgan index, $1bn new additional investments will be pumped into the Egyptian government securities market from treasury bills and bonds, and then achieve the debt management strategy in reducing costs.
For his part, Ahmed Kochouk, Deputy Minister for Financial Policies and Institutional Development, stressed that Egypt’s accession to this indicator translates the efforts of the Ministry of Finance to raise the efficiency of public debt management, with the application of a medium-term strategy to reduce its size and the cost of its service, which includes proposals to accelerate the path of reducing the debt of budgetary organs, through activating the stock market to increase liquidity levels and enhance the demand for government debt instruments, and then reduce their cost.
Nevine Mansour, Advisor to the Deputy Minister of Finance and the director of this project, said that over the past three years, there has been constant communication with the JPMorgan team to provide it with the latest data and developments of the government securities market, and work to meet the requirements for Egypt to join the index, which included extending the life of government debt, increasing the participation rate of foreign investors in government financial instruments, in addition to amending the procedures followed regarding non-double taxation and its application to foreign investors, thus contributing to the development of the Egyptian government debt instruments market, and then attracting a new segment of foreign investors to increase the demand for debt instruments, placing them on the global map of indicators, raising the confidence of international financial institutions and reducing the cost of debt.
She indicated that Egypt will also join the JP Morgan index of environment and governance by the end of January 2022, based on the launch of green bonds in October 2020, and Egypt’s percentage in this index will become 1.18%, which reflects Egypt’s presence on the map of sustainable economies and the country’s orientation towards green debt instruments.