Egypt: foreign investment in treasuries set to reach $10-11 billion

Foreign investment in Egyptian treasury instruments could rise to $10-$11 billion in a year's time as economic reforms buoy investor confidence, Finance Minister Amr El Garhy said on Sunday. Foreigners were significant investors in Egypt's government bonds and bills and a major source of hard currency before the 2011 uprising that overthrew autocrat Hosni Mubarak.
The central bank's decision in November to abandon a peg of 8.8 Egyptian pounds per dollar and freely float the currency, which has since halved in value, has helped revive foreign demand but it is still far from pre-2011 levels.
Bankers estimate the current level of foreign investment in Egyptian treasury instruments does not exceed $1 billion.
Floating the pound and other reforms, including electricity subsidy cuts and a new value-added tax, helped Egypt secure a $12 billion loan programme from the International Monetary Fund in November. That is also expected to attract more inflows from foreign investors.
"Getting to $10 billion will happen gradually and with reassurance that the measures of the economic reform programme are happening gradually and in a sound manner," El Garhy said.
"The more people see that we are achieving good results in our reform programme, the more they will be interested in investing so it is possible, within a year, to reach those levels (of $10-11 billion)."
Egypt will begin roadshowing a $2-2.5 billion Eurobond issue on Monday and El Garhy said orders had already started coming in. The roadshow will start in the United Arab Emirates, followed by the United States and United Kingdom and is expected to end by January 24 or 25, he said.
"We have received some indication that refer to acceptable figures (for the yields)," he said, adding that a small portion of the bond sale may have a 30-year tenor.
Garhi said that Egypt is working to control its budget deficit but had revised its forecast for the 2016/17 deficit to 10.1 percent by the end of 2016/17 from the initial 9.8 percent that was announced with the budget last year.