The government’s dollar bonds rallied on the news, posting some of the biggest gains in emerging markets on Wednesday

 

🇪🇬(Bloomberg) — Egypt named an investor-friendly ex-World Bank economist as finance minister alongside business executives and former bankers to other key portfolios, as the nation seeks to move on from the worst economic crisis in decades.

 

The government’s dollar bonds rallied on the news, posting some of the biggest gains in emerging markets on Wednesday. In the non-deliverable forwards market — used to hedge against declines in currencies — the pound’s 12-month contract strengthened the most since late April.

 

Egypt’s sovereign dollar bond due March 2049 jumped the most since March 6, the day the pound plunged and authorities announced the IMF deal. The country’s securities on Wednesday accounted for 14 of the 20 biggest gainers on the Bloomberg Emerging Markets Sovereign Total Return Index.

 

On the other side, Reuters said the sovereign dollar bonds due in 2047 increased by 1.96 cents, as of 11:24 GMT. Rising bonds indicates increased demand, reflects foreign investors' confidence in Egyptian debt and a decline in debt risks and creditworthiness.

 

Key Objectives:

Officials have said the key priorities of the incoming government will be to 1) curb inflation, 2) boost private sector growth, 3) cut spending, 4) decrease debt levels and 5) lay deeper foundations for sustainable development which includes more funding for health and education, as well as increased efforts to expand the urban footprint of a nation.

 

 

Summary:

 

1) Institutional quality is an important and essential factor for any investor especially in the case of emerging economies.

2) Government must target high levels of political stability, transparency and credibility to ensure the continuation of foreign capital inflows.

3) Egypt’s sovereign bonds have experienced a higher-than-usual demand as a result of the Ministerial change especially the Minister of Finance “Ahmed Kouchouk” who will use the fiscal policies in an efficient way to target low debt levels and this was regarded as one of the Egyptian economy main issues.

4) Foreign investors also believe in other newly hired government officials in terms of achieving the desired objectives of each ministry.