Cairo – Mubasher: Foreign investors are holding back from investing in Egypt’s debt instruments, according to a recent report by Bloomberg.
The average inflows from foreign funds stood at 2% per week since mid-August, down from 8%, the report showed.
Inflows from foreign funds declined, in line with the expectations of lower interest rates once inflation rate falls, the report highlighted.
The report added that Egypt’s foreign inflows reached its peak at $18 billion after almost a year.
Foreign investors now acquire 30% of total Treasury bills (T-bills) issued by the Egyptian government, according to the report.
The report indicated that interest rates in Egypt are too high for the economy to grow and the government to borrow, according to Bank of America Merrill Lynch economist Jean-Michel Saliba.
Egypt needs to find other sources of foreign exchange to meet its funding gap, Saliba continued.
Egypt decided to raise T-bills and bonds issuance by more than 51% year-on-year for the second quarter of fiscal year 2017/2018.
The Egyptian government will issue T-bills and bonds worth EGP 389.25 billion in Q2 of FY17/18, with a rise of 51.25%, versus EGP 257.34 billion in Q2 of FY16/17.
The Central Bank of Egypt (CBE) has recently decided to raise reserves requirement for banks to 14% from 10% starting from 10 October 2017.
The CBE had previously announced a 14.5% increase in foreign direct investment (FDI) in Egypt to $7.9 billion in fiscal year 2016/2017.
The Central Agency for Public Mobilization and Statistics (CAPMAS) had previously reported that Egypt’s annual inflation rate declined 32.9% year-on-year in September 2017.
