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Egyptian government borrowing pitpaces private sector borrowing in October 2013

January 28, 2014

The Egyptian government's borrowing from the banking sector climbed at the expense of borrowing by the non-government sector with bank credit extended to the public business sector, private business sector and household sector combined shrinking further to 38.0% of total domestic credit in October down from 38.7% in September, according to figures published in a monthly central bank bulletin. Banks credit extended to the private business sector contracted for the fourth month in a row albeit at a slower pace to EGP 366bn ( USD 52.5bn ), whereas, bank credit to the public business sector edged up 0.4% m/m to EGP 43.5bn . Lending to the household/consumer sector marginally increased by 0.5% m/m to EGP 130.1bn . Net borrowing by the Egyptian government through the debt market and bank lending as a share of total domestic credit increased by 0.7% m/m to 61.9% in October 2013 . Net banking sector claims on government increased by 3% m/m to EGP 880.8bn out of a total domestic credit of EGP 1 .421tn, up 1.9% m/m in October 2013 . The rise in net government borrowing was driven by increased government reliance on the banking sector to finance the budget deficit as a result bank holdings of government securities rose by 1% m/m to EGP 868.9bn . Meanwhile, total deposits held at Egyptian banks increased by 0.9% m/m in October to EGP 1 .241tn. Private sector deposits inched 1.1% m/m higher to EGP 1 .098tn, whereas, government sector deposits declined by 0.6% m/m to EGP 142.7bn . Egyptian Pound deposits rose by 1.5% m/m to EGP 881.6bn primarily as a result of 1.5% m/m increase in household deposits to EGP 732bn in October. While foreign currency deposits declined by 0.5% m/m to the equivalent of EGP 217bn in October. Total loans and discount balances to customers as a ratio of deposits with banks (loans/deposits ratio) fell by 0.4% m/m to 44.4% at the end of October as a result of the bank's inclination to invest in risk-free government debt instruments and tighter lending standards by banks.

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Source: IntelliNews - Weekly Reports

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