Egypt takes steps to curtail direct borrowing from CBE
Updated 5/7/2024 7:29:00 AM
Arab Finance: The Egyptian government has initiated measures to limit its direct borrowing from the Central Bank of Egypt (CBE) in a bid to bolster economic stability, Asharq Business reported, citing data from the central bank.
Recent data reveals a notable monthly decline of 24% in the government's direct borrowing from the CBE, hitting EGP 1.697 trillion in March.
Direct borrowing from central banks, also known as inflationary financing, entails printing cash in exchange for loans, presenting a convenient yet potentially destabilizing option for governments due to its low cost.
Unlike government debt instruments, which carry high returns and contribute to increased budget deficits, borrowing directly from the CBE often involves minimal or zero interest rates, negotiated between the parties.
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