The state will allocate the entire USD 3.5 bn from the Alam El Roumdevelopment to close the financing gap and ease pressures on the state treasury’s FX needs, a senior government official tells EnterpriseAM. The move marks a departure from the previous policy that saw the Finance Ministry only take half of asset sale and investment proceeds to pay down debt.

Why this matters: By channeling 100% of these inflows to the treasury, the government is prioritizing the reduction of high-cost external borrowing and easing the immediate pressure on foreign currency reserves. This follows a month in which the government settled some USD 2.3 bn of international bond and sukuk maturities.

To address high interest rates globally and the rising cost of insuring sovereign debt in the short term, the ministry is also planning smaller international bond issuance, likely totalling USD 1 bn-2.5 bn, according to a government document seen by EnterpriseAM. Rather than going all in on large issuances as in the past, the risk of current geopolitical risk premiums is pushing the state to look towards smaller tranches to better navigate and wait out market volatility. The issuance could also involve extending the maturity of existing obligations at longer tenors and competitive terms, our source told us.

In the longer term, the finance and planning ministries are looking towards securing concessional and semi-concessional loans, which they plan to make up 66-70% of all external financing for the second half of the FY. The push is driven by a desire to meet debt obligations without drawing down the central bank’s FX reserves.

DATA POINT- Fitch currently estimates the country’s total debt obligations at around USD 18 bn. The Finance Ministry trimmed external debt by USD 2 bn during the first half of the current FY, with further reductions planned for 2H, according to the document we reviewed.

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