Central Bank of Egypt: Financial Stability Index increased in June 2021

The Financial Stability Report for 2020, released by the Central Bank of Egypt on Monday, showed the success of Egypt’s financial system in containing the repercussions of the coronavirus pandemic.

The economy appears to continue to achieve positive growth rates in the fiscal year (2020/2021), despite the world’s exposure to a pandemic-induced economic downturn in 2020.

The CBE report explained that this happened thanks to the flexibility and diversity of the Egyptian economy, and the effective proactive measures and policies taken to deal with the repercussions of the coronavirus pandemic, supported by the gains of the economic reform program.

Although the pandemic has caused a high level of uncertainty among foreign investors, resulting in lower net foreign flows to emerging markets in 2020, the report notes that components of the Egyptian economy – in addition to the sector banks benefiting from high levels of local and foreign currency liquidity – helped contain the sudden exit of investment portfolios from the local treasury bill market during the first half of 2020.

While the second half of 2020 saw the start of the return of foreign investors, which continued through the first half of 2021, their share of total local currency treasury bill balances – in June – exceeded the level before the pandemic.

Net international reserves have also played a key role in fending off the first consequences of the pandemic and have remained in a sufficient range with respect to short-term foreign currency obligations.

These components have allowed exchange rate stability, low market risks for the banking sector and the absence of systemic risks resulting from fluctuations in foreign capital.

The report revealed the success of the Central Bank of Egypt in improving the credit environment, supported by a set of economic and precautionary policies, and the launch of numerous initiatives that are commensurate with the nature of each activity. economic separately, without excessive risk.

An increase in the financial stability index in June 2021, recording 0.51 against 0.49 in June 2020, under the effect of the increase in macroeconomic indicators was also noted; the banking sector continuing to achieve a high level of stability.

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