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Egypt collects EGP 50B in bond & treasury bill taxes over 3 months

The Clap
Egypt’s tax revenues surged 37% in Q1 of Fiscal Year 2023/2024 from bond and treasury bill returns, totaling ~EGP 50 billion.

What
According to official data, the Ministry of Finance report indicates a significant increase compared to the same period last fiscal year, reaching EGP 49.96 billion from July to September, up from EGP 36.34 billion.

Claps Class – EGP Bonds and Treasury Bills
These are local debt instruments issued by the government to finance its budget deficit and sold to investors as a means to fund its expenses and projects, such as development projects or debt repayment. Investors purchase them at a fixed amount and, in return, receive returns over a specified period.

So What
The expected increase is attributed to the government’s rising borrowing through bonds and treasury bills amid this year’s budget deficit, maintaining the tax rate at 20% on local debt yields.

Some Context
So far, the primary beneficiary of the returns resulting from the government’s increased borrowing in this manner is the banks in general—both government-owned and private-sector banks. In other words, as the budget deficit grows, banks fill this gap by lending to the government at a relatively high-interest rate, subject to supply and demand forces, along with rising interest rates compared to last year.