[2007-07-06]  Egypt to make domestic debt Euroclearable - Finmin
LONDON (Reuters) - Egyptian Finance Minister Youssef Boutros-Ghali said on Thursday the government plans to make its domestic debt clearable through the settlements system Euroclear in an effort to attract more international investors to its robust economy.

Egyptian officials are currently in London talking with investors about a planned Eurobond that Boutros-Ghali previously told Reuters in March would be up to 5 billion Egyptian pounds payable in U.S. dollars. At that time he said the tenor would be no more than 10 years.

The lead managers of the issue will be Citibank and J.P. Morgan.

"I intend to follow this with a registration of all of my (Egyptian pound) bonds that have been issued until now in Euroclear so that they become tradable in Euroclear and therefore I have the international market participating actively in the domestic market without having to be there," Boutros-Ghali said in an exclusive interview with Reuters.

Euroclear is the world's largest provider of settlement and related services for bond, equity and fund transactions. Settlement is the final stage in a share or bond trade where ownership of a security is exchanged for cash.

"We will start with a big chunk of it, say 20-30 billion pounds. The market is about 167 billion pounds. We will do it gradually. The bonds have already been issued and are in the hands of the private sector, but will be easier to trade on the Euroclear system," Boutros-Ghali said.

In a separate interview with Reuters on Thursday, Mohamed Assad, the head of the government's public debt management division said the currency is expected to be Euroclearable by the end of the year.

"We are planning it in the next few months, perhaps by October. But safe to say it will be by the end of the year," said Assad.

GAS SUBSIDIES

Egypt's government is undertaking major economic reforms to liberalize the economy through privatisation of state industries and an expansion of its domestic financial markets.

Boutros-Ghali reiterated gross domestic product for the fiscal 2006/2007 year that ended June 30 is likely to be around 7 percent. He said fiscal 2007/2008 GDP growth is expected to be 7.5 percent.

One major change in the works is a planned reduction in the subsidies given for energy which could stoke inflation. Boutros-Ghali said any rise in inflation would be temporary.

"We are working on it. We still don't know (how big the cuts will be). The announcement will come in the next three to four months and certainly not before the end of July," he said.

"The subsidy cut causes a one time jump in prices which has a minimal effect on inflation. It is not a permanent affair."

Energy subsidies are one reason for Egypt's sizeable budget deficit. The deficit has improved over the years due to better fiscal management and privatisation of state industries.

Boutros-Ghali said the current forecast for a 6.7 percent budget deficit in fiscal 2007/2008 is conservative and does not take into account the likely sale in this period of mobile phone operator licenses that allow for direct long distance calling.

On March 21 in an interview with Reuters, Communications and Information Minister Tarek Kamel said the licenses could raise an additional $500 million to $600 million over the next two to three years.

copyright(c)2007
Source: © Reuters 2007. All Rights Reserved