CAIRO: In its latest statistical bulletin, the Central Bank of Egypt (CBE) announced Monday that Egypt’s public debt soared to more than 1.7 trillion EGP ($238 billion) at the end of March, the state-run MENA reported Monday.
Around 84.6 percent of that amount is from government spending, and 12 percent comes from the National Investment Bank (NIB). The remaining 3.4 percent is owed by public companies.
The CBE report noted that government debt has increased by 184 billion EGP during the last two quarters from July to March. The NIB’s debt soared by 2.1 billion EGP in the same period to hit 205.1 billion EGP.
Total deposits in the banking system outside of the CBE edged higher by about 16 billion EGP, totaling 1.34 trillion EGP last February against 1.32 trillion EGP in the same period last year, Al-Shorouq reported.
The CBE noted that 228.7 billion EGP was deposited in banks in foreign currencies.
It also reported domestic liquidity edged higher by 11 percent by about 16 billion EGP to reach 1.44 trillion EGP at the end of March. The increase in domestic liquidity led to a 10.3 percent increase in quasi-money and a 13 percent increase in money supply during the same period.
The CBE attributed the increase in domestic liquidity to a 19.5 billion EGP increase in currency circulation outside the banking system, an 11 percent increase. There was also a 28.8 percent decline in local currency deposits.
Speaking to The Cairo Post about the CBE report, Ahmed Roshdy, former head of the National Bank of Egypt, said that recent political action along with growing government expenses and the recent decline in Egypt’s revenues were the major reasons for the rise in public debts.
“The soaring debt is considered a dangerous indicator for the economy, but in a state of neglect, the Egyptian government took actual steps to cover its debt,” he said.
He was referring to the government’s recent decisions to ration subsidies, reduce expenses and impose new progressive, wealth and stock market taxes.
Roshdy also said the high public debt is a major factor behind increased rates of inflation. But as for the increase in total deposits, Roshdy said it would have positive and negative aspects: It will increase depositor trust in the banking system but slow investments.
“The true place for deposits is not at banks but in new investments,” he said.