Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt, November 3, 2016. (Photo: Reuters)
Lowering the borrowing cost in the past period has contributed to reducing the public debt by EGP 280 billion ($17.7 billion) annually, an informed source at the Central Bank of Egypt (CBE) told state run MENA agency.
The source said the borrowing cost has decreased by around 7 percent to levels lower than before 2016's flotation of the pound, with the borrowing cost currently at 11.2 percent from a previous 18 percent.
The significant decrease in lending interest rates will have its positive effect on the state’s general budget by reducing the budget deficit, especially after Egypt's total public debt reached EGP 4 trillion, the source said.
In November 2016, Egypt floated the pound, allowing local banks to freely set the exchange rate of the EGP against foreign currencies—part of a set of reforms aimed at alleviating a dollar shortage, eradicating the black market and stabilising the country's flagging economy.