Debt management strategy expected by year-end, IMF says

We can expect to see an updated medium-term debt management strategy before the year is out, which will detail an annually updated multi-year borrowing strategy, guided by a portfolio cost and risk management framework, the IMF said in its country staff report (pdf) for the fourth review of our USD 8 bn loan program. This will also come alongside debt portfolio risk tolerance thresholds and operational targets, the IMF noted. Meanwhile, the strategy will encompass foreign and domestic debt, going through all instruments and financing sources.

REFRESHER- A senior government source told us earlier this week that the new public debt strategy for 2025-2030 could be released before the current quarter wraps. The strategy, which will include social and sustainability bond issuances, was set to be rolled out at the beginning of this year. However, it was postponed due to “disruptions in the interest rates market and difficulty predicting the repercussions of previous [geopolitical] tensions on the bond market,” the source told us at that time.

Reforms on the way: As part of the plan, we’re committing to implementing “comprehensive reforms along key structural and operational pillars” to improve our overall public debt management. Among the reforms to expect moving forward is the creation of a unified Debt Management Office (DMO), along with broadening the domestic debt market through the introduction of new debt instruments, including retail bonds.

The government is aiming to launch a retail bonds market this year, a senior government source told us previously. This move will allow individuals, for the first time, the option of purchasing government debt instruments and reduce the government’s debt service payments. The move is pending ongoing amendments to the system governing primary traders.

Potential side effects: These reforms may lead to a higher interest cost in the short term “in favor of medium-term capital markets savings,” the IMF said.

Improved debt reporting: “The authorities plan to prepare and publish general government debt statistical bulletins and/or reports on a recurring (quarterly), timely, comprehensive basis covering all aspects of debt and borrowing starting with a first publication focused on central government debt in April 2025, with expanded scope in November 2025 onwards,” the IMF’s report read. The Finance Ministry’s commitment to improving its debt reporting will require incorporating data on domestic financing instruments — such as auction results, private placements and overdraft borrowing — into central and general government in the current debt reporting structure, according to the IMF.

What does Egypt aim to achieve from the debt management strategy? Reducing the gross financing needs (GFN) through gradually extending the issuance maturity of domestic debt through auctions. Although Egypt just missed its end-of-September indicative target, it has steadily improved “the yearly cumulative average time to maturity at issuance of government securities from 0.56 years in June 2024 to 0.84 years in September 2024,” the IMF noted.

Public debt average maturity hit 1.8 years by the end of May 2025, according to our sources. This was primarily due to strong investor appetite for long-term debt instruments, a trend supported by CBE’s move to put interest rates downward, our sources noted.

Could this fast-track our return to the JPMorgan bond index? The move to extend the maturity of public debt instruments could accelerate Egypt’s return to JPMorgan’s Government Bond Index-Emerging Markets, our sources told us before, a target the government hopes to hit by 2026. Egypt is currently seeing significant capital inflows, making our public debt market exceptionally attractive to foreign investors due to very appealing interest rates, we were told before.

The draft public debt document will establish a practical framework for debt issuances over five years, a government source told EnterpriseAM yesterday, given that there will be a quantitative breakdown of issuances for bonds, treasury bills and green bonds for the five-year period. The final draft may be subject to review by the IMF before its release, the source added.