Successive governments in Egypt do not make use of a number of available funding means, said Chairman of the Egyptian Financial Supervisory Authority (EFSA), Sherif Samy. "The government is facing a challenge in funding mega projects, such as the 1.5m acres reclamation project. However, according to my point of view, the real challenge is how to use the funding resources available, especially in non-banking financial activities," he said. Samy noted that the EFSA made amendments last year to the Executive Regulations of Capital Market, so that revenue bonds can be issued, especially for the government and its bodies, to fund projects of economic feasibility. However, the government did not fund any of its projects to date. Revenue bonds may be used to fund the Suez Canal Economic Zone development project, especially since the mechanism was promoted when the project was launched so that it would be easier for the government to participate in investments in the Suez Canal Area Development Project. "EFSA's role is to develop funding tools, and make it clear to the government how to make use of them, not to oblige reliance on them. If the government decides to issue revenue bonds, it has to make accurate feasibility studies for profitable projects in order to succeed in attracting investors to subscribe to them," according to Samy. The Executive Regulations of Capital Market Law stipulates that the Ministry of Finance should allow the issuance of revenue bonds that fund projects with specific calculations, like power plants, roads or quays. The regulations stipulate the repayment of the bonds through the cash flows from these projects. "The governmental bodies have successful previous experiences in issuing bonds, especially the New Urban Communities Authority, which issued bonds worth EGP 5bn in 2010 to fund infrastructure works," added Samy. According to Samy, the state should approve amendments to the bonds section that includes sovereign bonds within the group of legislations the government discussed, and approved by the president. Although the Legislative Reform Committee approved amendments to the bonds section among a group of amendments to the Capital Market Law, there is ongoing disagreement between EFSA and the Ministry of Finance on the authorities that should supervise the sovereign bonds issued. The Ministry of Finance believes that it has the right to issue bonds without waiting for EFSA's acceptance, while EFSA believes that its supervisory role is important given that it is the body responsible for protecting investors and making sure the issuance procedures meet all the requirements, such as the credit rating. Samy asserts that the government has many funding sources, such as the financial leasing of equipment and facilities, as well as securitisation bonds that are issued and secured by government debts owed to various bodies. He adds that the last steps EFSA made were to amend the Executive Regulation to allow the Suez Canal Authority to establish joint-stock companies and enlist them in the stock market as a funding mean for the Suez Canal Area development project.
