The Finance Ministry looks to 15-year bonds to break the short-term debt cycle

The Finance Ministry is moving beyond simple debt reduction toward a structural overhaul of the local bond market. The finalized public debt strategy — already briefed to the cabinet — aims to aggressively lengthen average maturities to 4.5-5 years, slash interest costs by 4% of GDP to 7%, and bring the debt-to-GDP ratio down to below 75% over the next three years, a senior government official tells EnterpriseAM.

The ministry is preparing to launch 15-year local bonds for the first time in a move designed to “extend the debt tenor and reduce the burden of maturities within a single fiscal year,” our source tells us. This is part of a broader reopening strategy where the government will stop launching fragmented new issuances and instead build up existing bonds to EGP 25 bn each — a key requirement for re-inclusion in major emerging market indices. Simultaneously, the secondary market is being democratized, allowing individual retail investors to trade T-bills and bonds directly on the EGX.

Why it matters: For years, Egypt has been trapped in a refinancing wall, constantly rolling over short-term debt at high costs. By pushing maturities toward a five-year average and targeting a drop in interest payments, the state is trying to claw back fiscal space. If successful, this reduces the crowding out of the private sector and signals to international markets that the era of emergency short-term borrowing is ending.

Local borrowing will continue to shoulder the lion’s share of the financing gap to hedge against exchange rate volatility. The strategy maintains a domestic-to-foreign financing ratio of 65% to 35%. To deepen the local market, the ministry plans to roll out green bonds, zero-coupon bonds, variable-rate instruments, and specific tools targeted at expats, we’re told.

In a move to de-risk the balance sheet, the ministry is cutting back on the guarantees it provides to government entities. Borrowing entities must now prove they can generate sufficient cashflow to service debt independently. “We are re-evaluating risk to reflect a portfolio management approach besides the current one focusing on analyzing specific state-owned firms,” the source noted.