Arab Today, arab today egyptian banker warns of deepening economic crisis
Last Updated : GMT 14:57:10
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Morsi government borrows 11 billion EGP

Egyptian banker warns of deepening economic crisis

Arab Today, arab today

Arab Today, arab today Egyptian banker warns of deepening economic crisis

Tarek Helmy has criticised the government's reliance on borrowed funds
Cairo – Mohamed Salah  

Tarek Helmy has criticised the government\'s reliance on borrowed funds Cairo – Mohamed Salah   The Egyptian government has begun 2013 by borrowing 11 billion EGP from banks to meet the budget deficit and pay the salaries of up to 6 million public sector employees, financial sources told Arabstoday. The Ministry of Finance decided to borrow a total 11 billion EGP, with six billion EGP borrowed on Thursday and the remaining five billion borrowed on Sunday, sources revealed.
Two Treasury bills necessary to borrow the final five billion will be issued on Sunday, reports say: one providing one billion pounds over 91 days and another worth four billion pounds over 266 days. Two other Treasury bills were issued on Thursday.
The Finance Ministry said it will issue five-year Treasury bonds, maturing on November 13 2017 and seven-year Treasury bills maturing on November 13 2019.
Former CEO of United Bank Tarek Helmy said banks permitted “excessive” investment in governmental Treasury bills -- particularly public banks, he said -- which ultimately hurt the financial sector due to the government’s inability to pay back borrowed funds. Helmy claimed public sector banks had worsened the crisis after consistent reduction in credit ratings. “More than six times,” he said, “and most recently a few weeks ago.”
Helmy claimed the government would not be able to the salaries of more than six million public sector employees, leading to a rise in commodity prices and exchange rates.
“Banks are trying to seize the opportunity in light of the government\'s need to raise interest rates on government debt instruments,” he claimed, after rates exceeded 14% amidst deteriorating economic conditions and a cash-strapped national government.
Helmy explained that the government had not paid back borrowed funds from banks in recent years due to the budget deficit and public sector wages totaling 80 billion EGP, while domestic debt in Egypt surpassed the one trillion mark in December last year.

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