Egyptian banks are facing a decline in asset quality due to the economic impact of the Corona pandemic.
The Central Bank of Egypt said on Monday that it had approved a set of rules that would allow it to provide emergency liquidity to local banks.
The bank added – in a statement – that it will grant liquidity to banks when they are unable to provide it from the interbank market or from other financial markets.
The bank stated that liquidity will be available to solvent banks only for a maximum period of 180 days, and the financing or part of it can be extended for other periods.
He said that the interest rate for emergency liquidity will be determined at the central bank’s overnight lending rate plus a margin set by the bank at a minimum of 5%.
Two bankers told Archyde.com that the banks were unlikely to benefit from the measure, which has been discussed for more than a year, because funds available under the central bank’s overnight lending facility are cheaper.
Egyptian banks are facing a decline in asset quality due to the economic impact of the Corona pandemic.
The economy achieved limited growth in 2020 and 2021 thanks to government support packages for the hardest-hit sectors.
Inflation accelerated
In Egypt, the annual inflation rate accelerated to 6.5% last December, up from 6.2% in November.
The Central Agency for Public Mobilization and Statistics said, in a statement, Monday, that the annual inflation is caused by the rise in the prices of the food and beverage group by 9.7%, and transportation and communications by 4.1%, and education by 13.9%.
The cost of housing, water, electricity, gas and fuel increased on an annual basis by 4.8%, miscellaneous goods and services by 3.3%, and clothing and shoes by 3.1%.
According to the statistics statement, inflation fell on a monthly basis by 0.2% last December, due to the decline in the prices of vegetables, meat and poultry at varying rates.
The Central Bank of Egypt has maintained the main interest rates unchanged since November 2020, while the current inflation rate is consistent with the approved interest rates.
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