CBE Reduces Reserve Requirement to 12% On Increasing Deficit

Egypt’s central bank decided Tuesday to reduce the proportion of reserve requirement on domestic deposits with about 200 basis points, falling from 14% to 12% starting from today.

CBE said in a statement today, that lowering banks’ reserve requirement is to provide additional liquidity in the banking system and facilitate the credit market mechanisms.

Banking sources close to the central bank said that this step was a result of low liquidity of local banks due to expansion in investment, governmental debt instruments “Treasury bills and bonds” after deficit in state budget during the current fiscal year reached EGP 144 billion, leading the government to rely on local banks to cover the deficit.