Egyptian Minister of Finance Mohamed Maait said on Monday that Egypt has officially joined the JP Morgan Emerging Market Government Bond Index from Monday, to become one of only two countries in the Middle East and Africa to join such index.
Egypt expects to join the JP Morgan Index with 14 bonds issuances, worth about $26 billion with their percentage in the index expected at 1.85 per cent, he said.
In a statement released by the Finance Ministry on Monday, Maait said Egypt’s joining the index is a new evidence of the foreign investors’ confidence in the steadfastness of the Egyptian economy and its flexibility in dealing with international challenges especially that 90 percent of foreign investors surveyed by the JP Morgan have supported Egypt’s access.
Maait noted that this step reflects his ministry’s continuous efforts to reduce the cost of public debt as part of the package of measures taken by the state for economic reforms. It also comes as part of implementing the strategy to reduce public debt in the medium term, especially in terms of additional proposals to accelerate the path of reducing the debt of the budget apparatus.
This intends to activate the stock market to provide liquidity and enhance demand for government debt instruments and thus reduce their cost, added the statement.
Maait added that with Egypt’s transition from the watch list to the actual index, about $4.4b will be pumped as additional new investments into the government’s securities market. This will come in the form of Treasury bills (T-bills) and bonds (T-bonds), thus achieving a debt management strategy to reduce the cost.
The minister explained that Egypt was formerly part of the index’s watch list, but left it in June 2011 for not meeting the requirements of JPMorgan Chase.
He also said that, about 18 months ago, the Ministry of Finance began to work towards re-joining through achieving the bank’s requirements. This includes: extending the life of the government debt; adjusting the Yield curve; and raising the percentage of foreign investors’ participation in government financial instruments, with an increase in the size of each issue.
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