Cairo is set to return to the international debt market as early as January 2018, according to a number of local banking sources.

Sources have told MEED that the finance ministry is looking to raise as much as $4bn to fund Egypt’s budget deficit.

The government has not yet appointed any banks or advisors to manage the transactions.

In May this year Cairo launched a $3bn tap of its existing $4bn triple-tranche Eurobond, raising $1bn more in new funds than the previously indicated amount in second aggressive borrowing move this year.

The move came after the government approved raising the limit of the maximum amount of dollar bonds the country could issue on international markets by $2bn. The ceiling of international dollar issuances to fixed income investors was raised from $5bn.

Egypt’s Ministry of Finance is trying to secure additional funding in the wake of rising interest rates in the domestic debt market and hope to shore up the balance of cash reserves at the country’s central bank.

The Central Bank of Egypt (CBE) also raised key lending and borrowing rates, the first such move since it aggressively hiked them by 300 points in early November, following the flotation the Egyptian pound. The central bank increased both rates by approximately 200 basis points following a Monetary Policy committee (MPC) meeting on 22 May. Overnight deposit rate was increased to 16.75 per cent from 14.75 per cent, and the overnight lending rate to 17.75 from 15.75 per cent.

Egypt has been seeking to diversify its funding options and has mainly relied on loans and foreign grants, especially, from its oil-rich allies Saudi Arabia, UAE and Kuwait in the GCC. The country has agreed a $12bn loan programme from the International Monetary Fund (IMF) to support plans for sweeping economic reforms. However, it still suffers from a shortage of dollars, which has affected its ability to import goods.