The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to increase the overnight deposit and lending rates by 200 basis points from 14.75% to 16.75%, and from 15.75% to 17.75%, respectively. When the overnight deposit and lending rates are increased by 100 basis points, the debt service will rise by more than EGP 15bn, threatening the country’s fiscal policy. He added that the planned state budget for FY 2017/2018 will spend EGP 380.986bn on interest expenses. Egypt paid EGP 243.635bn in debt interest payments for FY 2015/2016, while the Ministry of Finance expects to pay EGP 303.879bn in interest payments for the current FY. The central banks around the world usually tend to increase interest rates to lower cash supply in a market with a high inflation rate.

Source: Daily News Egypt May 22, 2017 16:18 UTC