The Information and Decision Support Centre (IDSC) issued an infograph with the title “Stability of the financial system contributed to confronting the economic repercussions of COVID-19,” which included a presentation of the most prominent points in the Financial Stability 2019 report, issued by the Central Bank of Egypt (CBE).
The report said that the stability of the financial system and the improvement in economic performance helped the Egyptian economy withstand the repercussions of the COVID-19 pandemic.
The CBE has taken several proactive measures, including slashing key rates by four percent (400 bps) and launching several initiatives aimed at maintaining domestic production, keeping unemployment rates low, and preserving the gains of the economic reform programme.
This was evident in the decline in the unemployment rate in Egypt to 7.3 percent in the third quarter of 2020, which is the lowest recorded rate, down from 9.6 percent in the the second quarter of 2020, according to the IDSC.
The CBE also launched the industrial private sector initiative, with EGP 100 billion, and the real estate financing initiative for middle-income people, with EGP 50 billion, in addition to a number of initiatives targeting the tourism sector and its workers.
Egypt offered international bonds worth $5 billion in May 2020.
The CBE’s financial stability report, issued in December, revealed that Egypt is targeting a two percent initial surplus to GDP ratio in FY 2020/2021 and attaining a 6.3 percent total budget deficit.
The CBE said the government offered international bonds worth $5 million in May 2020 despite the decrease in investments in emerging markets in the first quarter of the year.
It also said that the fiscal stability index witnessed a notable improvement in 2019, before declining by the beginning of 2020 due to COVID-19.
Concerning the initiatives that the CBE launched in 2020 to support the construction, agricultural and industrial private sector, the report revealed that the total allocation reached EGP 68.8 billion through the end of June 2020.
Moreover, the total amount of loans and facilities portfolio under the initiative of supporting micro, small, and medium-sized enterprises (MSMEs) recorded EGP 201.8 billion from the end of December 2015 through the end of June 2020.
The report also showed that the banking sector represented 89.6 percent of the financial system by the end of FY 2018/2019, which enjoyed good fiscal safety indices through June 2020 despite the challenges imposed by the COVID-19 pandemic.
In this regard, the report disclosed that the total assets of the banking sector reached EGP 5.3 trillion in FY 2018/2019 (5.8 percent growth rate compared to the previous fiscal year), which continued to grow to reach EGP 6.4 trillion in June 2020.
On the other hand, domestic and hard currency liquidity in the domestic market reached 44.4 percent and 67.7 percent, respectively, in FY 2018/2019, which increased to 54.3 percent and 70.3 percent in June 2020, according to the report.
Egypt's net foreign assets rose to EGP 77.2 billion in December 2019, driven by the increase in foreign cash inflows in 2019 that contributed to the significant increase that the net international reserves (NIR) witnessed in December 2019 at $45.5 billion, according to the report.
On the non-banking sector, the report said that the total assets of the sector reached EGP 615 billion in FY 2018/2019, representing 10.4 percent of the total assets of the country’s fiscal system.