Minister of Finance Mohamed Maait announced that Egypt officially joined the JP Morgan index of government bonds in emerging markets starting Monday, to become one of the only two countries in the Middle East and Africa to join this index.
He pointed out that Egypt is expected to enter this index with 14 issues with a total value of about $26bn with a share of 1.85%, which enables major investment funds and more foreign investors to invest in Egyptian debt instruments in the local currency.
Maait added in a statement issued by the Ministry of Finance that Egypt’s accession to the JP Morgan index is a new certificate of confidence from foreign investors in the solidity of the Egyptian economy and its ability to deal flexibly with global challenges, especially that 90% of foreign investors in opinion polls supported Egypt’s entry into the index.
He explained that the ministry began about three years ago to relist Egypt into the index after it exited in June 2011, as Egypt was able to fulfil the requirements of the bank, including extending the life of the government debt, adjusting the yield curve, and raising the participation rate of foreign investors in government financial instruments with an increase in the volume of each issuance, noting that this step reflects the continuous efforts of the ministry to reduce the cost of public debt as part of the package of economic reforms adopted by the state in recent years.
Ahmed Kochouk, the Deputy Minister for Financial Policies and Institutional Development, said that Egypt’s accession to this index demonstrates the efforts of the ministry to raise the efficiency of public debt management with the implementation of a medium-term strategy to reduce its size and the cost of its debt service, which includes proposals to accelerate the path of reducing the debt of budgetary organs by activating the stock market to increase liquidity levels, enhance the demand for government debt instruments, and then reduce their cost.
Nevine Mansour, the Adviser to the Deputy Minister of Finance and the Director of this project, said that over the course of three years, there has been constant communication with the JP Morgan team to provide it with the latest data and developments of the government securities market and to work to meet the requirements for Egypt’s accession to the index, which included prolonging the age 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 government debt instruments.
She indicated that Egypt will also join the JP Morgan Environmental and Governance Index given the launch of green bonds in October 2020, and that Egypt’s percentage in this index will be 1.18%, reflecting Egypt’s presence on the map of sustainable economies and the country’s orientation towards green debt tools.