How to make Egyptian bonds more desirable?

Over the past two weeks, the CBE has gone through several offerings of T-bills meant to finance the country’s budget deficit. Of these, the last offering had a value of EGP 38 billion, but the accepted bids amounted to only EGP 4.97 billion. Before this, an offering with a value of EGP 3 billion brought in EGP 1.09 million. In late March, another offering valued at EGP 3 billion brought in EGP 5.05 million.

This poor showing reflects market uncertainty, with investors anticipating another devaluation in the Egyptian pound.

Egyptian debt instruments have been declining in value ever since the Russian invasion of Ukraine last year helped kick off an economic crisis in the country and led to plunging foreign currency inflows.

The situation worsened for all emerging markets when the US Federal Reserve raised interest rates in a bid to tackle inflation.

The CBE adopted a similar policy to rein in inflation that has reached a historic high in Egypt; annual core inflation rose from 31.2 percent in January to 40.3 percent in February.