President Abdel Fattah al-Sisi issued a decree on Monday to offer new certificates to the public in order to generate revenues in the development of the Suez Canal area, where the canal authority aims to build new infrastructure and industries to attract foreign investments.
The decree did not state how much funding was needed.
In February, the Suez Canal Authority was considering applying for a foreign currency loan from domestic banking institutions to finance the foreign component of the project, according to Al-Mal newspaper.
The Suez Canal Authority is currently in negotiations with local banks for a bridge loan of US$450 million, Al-Mal reported last week.
In August, Sisi declared the construction of a new 72-km (45-mile) canal alongside the Suez Canal with the aim of increasing Egypt's economic output. For this project, the government reached its LE64 billion (US$8.5 billion) funding goal, which it financed by issuing investment certificates in the domestic market.
Returns of certificates issued at values of LE10 and LE100, will be redeemable with a cumulative interest after five years, while holders of certificates at a value of LE1,000 will yield a 12 percent interest every three months.
Suez Canal certificates push up EFG Hermes's (Egypt's biggest investment bank) expectations for Egypt's budget deficit to 11.3 percent of the country's GDP (compared to the previous 10.9 percent) in the 2014/15 fiscal year and 10.9 percent (compared to the previous 10.4 percent) in the 2015/16 fiscal year.
Mohamed Abu Basha, an economist at EFG-Hermes, explained that this prediction is to account for lower transfers from the Suez Canal Authority as it pays the annual interest and principals for the debt.
Abu Basha added that the government would set aside LE12 billion annually over the coming five years to ease the burden of having to repay the principal five years from now. The government will also have to pay LE7.2 billion more annually as an interest rate (12 percent).
Egypt's budget deficit has increased to reach about 6.9 percent of the GDP (LE159 billion), compared to 6 percent (LE119.6 billion) during July-January 2013/2014, according to the monthly financial bulletin for February 2015.
The new canal is scheduled to be completed by August 2015, an ambitious target set by Sisi.