Improving Public Debt Management
In the OIC Member Countries
100
B) Public Debt ManagementGovernance and Strategy Development
Legal frameworkThe legal basis of the government of Egypt’s borrowing activities is the annual budget law
formally approved by the parliament. Drawing up the budget is regulated in law no. 53/1973
as amended by law no. 87/2005 and law no. 109/2008. The Ministry of Finance (MoF) has the
responsibility for issuing TBills and TBonds according to Article no. 127 of the Egyptian
Constitution.
In 2016 a Public Financial Management Reform Unit was established to ensure the monitoring
of fiscal risks emerging from public entities. Furthermore, the unit will consider the
introduction of limits to government guarantees. The so called Contingent Liability Committee
(CLC) has the mandate to control the general government portfolio and transactions that result
in contingent liabilities (MoF 2016b).
Managerial structure (incl. coordination with other policies)The Debt Management Unit (DMU) within the MoF is responsible for carrying out the debt
management strategy, in particular planning funding requirements and restructuring of public
debt. A working group reviews debt management policies and approves the debt management
strategy (Ministerial Decree no. 515). The Central Bank of Egypt (CBE) acts as a fiscal agent for
the MoF managing for example the auction process of government securities. The CBE is also
responsible for recording and keeping track of Egypt's external debt.
Debt reportingThe MoF monthly publishes a report on the Egyptian economy (“The Financial Monthly”),
which also contains statistics on the public debt profile. The debt management strategy
document further includes a cost and risk analysis of the debt. Both documents are also
published online. Furthermore, it is planned to publish a quarterly report showing recent
developments of contingent liabilities and other fiscal risks arising from public entities (MoF
2016b).
Debt management strategy (incl. risk management)Public debt management in Egypt has the objective to satisfy the financing needs of the state
“at the lowest longterm cost relative to general level of interest rates, at an examined degree
of risk consistent with prudent fiscal and monetary policies frameworks” (MoF 2006, p.1). The
MoF considers various types of risk connected to the issuance of debt such as refinancing risk,
currency risk, interest rate risk, and liquidity risk (see also Table 45).
The DMU has several general principles regarding debt management, including (i) a marketoriented funding strategy based on projected budgetary requirements, determining frequency,
volume, timing and maturities for all debt issues to ensure a prudent government debt
structure, and (ii) a debt issuance policy that promotes the development of the primary dealer
market, expansion of customer base and the creation of liquid government securities market.
The objectives of public debt management are specified in the MediumTerm Debt
Management Strategy (MTDS), which covers a time period of three years (currently 20152018). Debt management is supposed to ensure that “the treasury funding requirements and
payment obligations are met at a relatively low cost over the plan’s term, consistent with a
prudent degree of risk” (MoF 2015, p.5). An additional objective is the development of the