Mohamed Maait, the Egyptian Minister of Finance, said that his country has officially joined the JPMorgan GBI-EM Global Diversified Index, as of Monday, January 31.
“Egypt's entry into this index encourages investors to invest in purchasing debt instruments issued by the country to provide liquidity to finance projects and provide expenses,” he added yesterday in televised statements, explaining that Egypt's presence in the index gives investors reassurance.
“Egypt's presence in the index means that Egypt has fulfilled conditions that qualify it to exist in this index, and places it as an attractive country for investment,” Maait added.
He explained that “only two countries in Africa are present in this index, namely Egypt and South Africa, and 90 percent of foreign investors who were polled about Egypt's entry into the index supported Egypt's entry into the JPMorgan index, and this gives an indication of investors' impressions of the Egyptian economy.”
The Minister of Finance explained that this comes in the direction of investors’ view of Egypt in a positive light, explaining that “Egypt joined the index and exited from it after 2011. The chaos that followed sent negative messages about Egypt’s situation and economy.”
“After economic reform and restoring our balance, raising Egypt’s credit rating opened the way to correct the difficult path, and Egypt was included again in the index,” he said.
He explained that about three years ago, the Ministry of Finance began seeking to rejoin Egypt to the index after it exited in June 2011.
Egypt was able to achieve the bank's requirements, including: extending the life of government debt, adjusting the yield curve, and raising the participation rate of foreign investors in government financial instruments with the increase in the volume of each issuance.
He pointed out 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.
“Egypt added 14 EGP-denominated bonds worth around USD 26 billion to the JPMorgan GBI-EM Global Diversified Index, giving Egypt a weighting of 1.85 percent, enabling major investment funds and more foreign investors to invest in Egyptian debt instruments in the local currency,” Maait added.
Vice Minister of Finance for Fiscal Policies and Institutional Reform, Ahmed Kouchouk stressed that Egypt joining this index 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.
This includes proposals to accelerate the path of reducing the debt by activating the stock market to increase liquidity levels. It also enhances the demand for government debt instruments, thus reducing their cost.
Nevin Mansour, advisor to the Deputy Minister of Finance, said that Egypt also joined the JPMorgan index on environment and governance, based on the offering of green bonds in October 2020.
“Egypt's percentage in this index will become 1.18 percent, which reflects Egypt's presence on the map of sustainable economies and the state's orientation towards green debt instruments,” he said.
In the current budget, Egypt aims to reach EGP 990.1 billion ($63 billion) in domestic finance, compared to EGP 832.3 billion in 2020-2021.
External finances will reach EGP 78.4 billion, down from EGP 165.4 billion in 2020-2021.
