Finance Ministry launches Citizen Bond to lower borrowing costs by tapping retail investors

The Finance Ministry will debut its direct-to-consumer Citizen Bond today, with subscriptions available to retail investors through Egypt Post’s nationwide branch network, Finance Minister Ahmed Kouchouk said in a statement. While the cabinet’s announcement highlights the bond’s role in “enhancing financial inclusion,“ a desire to bypass the banking system and mop up micro-liquidity at a lower cost than institutional debt seems to be what’s really driving the move.

The 18-month, fixed-income bond is designed as a “secure savings and investment tool with a distinctive fixed monthly return,” Kouchouk said. The bonds will offer a net periodic return of 17.8% after taxes and provide a “good monthly return of 3–4%,” a senior government source tells EnterpriseAM, adding that as inflation continues to retreat, “the real return will be higher in future issuances.” Subscriptions start from EGP 10k to EGP 30k to prevent any resulting inflationary pressures.

Why this matters: While the secondary market for T-bills currently has yields hovering around 22-25%, the ministry is offering retail investors a lower net rate of 17.8%, helping it to average down its borrowing costs. The issuance also benefits from capturing a decent amount of liquidity that would otherwise sit in physical notes under the bed or in low-interest accounts.

Many Egyptians may be tempted to sign up given the expectation of positive real returns, with headline inflation of 11.9% y-o-y in January pointing to a return of around 6%.

The senior government official sought to reassure primary dealers (banks) that retail diversification would not hurt their business. Given that annual debt issuance is “massive,” there is room for all players. The ultimate goal is to “reduce the burden of borrowing from banks” and lower overall funding costs, they explained.

What’s next? While the initial launch is for 1.5 years, the ministry plans to add “longer-term tranches for individual investors in the future,” we’re told. This would further the state’s goal of extending Egypt’s debt maturity profile and help soothe one of the International Monetary Fund’s key concerns about our debt profile.

AND- Debt instruments tailored for Egyptians abroad will be ready very soon — by April at the latest — according to our source. The issuance will be offered through a dedicated digital platform currently under development to facilitate subscriptions and trading.