Deposits in Egyptian banks grew by 20.2% this past July compared to the same period last year, according to a report issued by the Information and Decision Support Center (IDSC) affiliated with the cabinet.
The report stated that deposits reached EGP 1,456.9bn in July 2014 compared to EGP 1,212bn for the same period in 2013.
The rise in banking deposits reflects heightened confidence and growing savings rates according to Banking Finance Advisor at Baraka Bank Egypt Bassant Fahmy, who said that “the rise in deposits does not necessarily reflect a growing economy, but must be used in lending activities for various economic activities.”
Government deposits in July reached EGP 187.8bn with 35.7% growth while non-government deposits reached EGP 1,269 with 18.20% growth compared to the same period last year according to the IDSC report.
Balances of credit facilities, whether governmental or non-governmental, increased by 6.8% in July 2014 compared to July 2013.
Government credit facilities increased to EGP 40.8bn representing 12.4% growth compared to the same period last year, while facilities granted to the agriculture, industry, trade, and services sectors amounted to EGP 346bn with an annual growth rate of 4.8%.
According to Fahmy, government debt at present amounts to EGP 1.8trn, EGP 2trn with annual interest, which leads to serious issues for payment processes in addition to a crowding out of the private sector in obtaining loans for growth and expansion.
The Ministry of Planning stated in a report published last week that growth rates in manufacturing industries recorded 8.3% growth last year.
“The increase in private sector borrowing in recent times reflects stability as well as the private sector’s desire for growth. I expect that growth will range between 5-10% during the second half of the year for the private sector,” said Hossam Nasser, former chairman of the Industrial Development Bank.
On the subject of the increase in credit obtained by the government in July, Nasser believes that “the circumstances that Egypt’s economy has experienced are difficult, and all countries of the world resort to funding the budget deficit through bonds and treasury bills.”
Despite Nasser’s agreement with the state’s obtaining credit to fund the budget gap, he requested that the government not always rely on this as a solution.