The Daily News Egypt

Decline in private sector’s share of bank loans to 63.2% end-2017: CBE


- By Hossam Mounir

Private sector clinets’ share of bank loans through December 2017 declined to 63.2% compared to 64.55% in May 2017 and 84% in 2014, according to the Central Bank of Egypt (CBE).

The CBE revealed in its monthly report that the value of the loan portfolios at banks reached EGP 1.45tn at the end of December 2017.

The CBE explained that the government obtained about EGP 373.831bn of the total of these loans, including EGP 167.59bn in local currency and about EGP 206.24bn in foreign currency.

According to the CBE, total nongovernm­ental loans from banks were estimated to be EGP 1.08tn, including EGP 750.33bn in local currency and EGP 328.9bn in foreign currency.

The CBE also pointed out that the private business sector obtained 61.4% of the total credit facilitati­ons given by banks to the non-government­al economic sectors at the end of December 2017.

Credit facilitati­ons are more inclusive, as they include the loans provided by banks to their clients, in addition to letters of credit and letters of guarantee opened for them to cover import operations.

According to the CBE, the total amount of facilitati­ons received by the government reached EGP 373.83bn by the end of December 2017, while credit facilitati­ons offered by nongovernm­ental banks reached EGP 1.09tn.

Regarding the most prominent economic activities that received credit facilitati­ons from banks, the industrial sector ranked first, as it received about 35.5% of the total of these facilitati­ons.

The services sector ranked second. Tourism is one of its most prominent activities, receiving 29.3% of the facilitati­ons. The commerce sector received 9.6% and the agricultur­al sector received only 1.1%.

Based on the data from the CBE, the share of the remaining sectors was estimated to be 24.6% of the total credit facilitati­ons.

The family sector is the most prominent of these sectors, which the CBE did not mention in detail, though its share is estimated to be nearly 17% of the total facilitati­ons provided.

According to banking expert Hany Aboul Fotouh, the increase in the rate of credit facilitati­ons provided to the government must be reconsider­ed, because government loaning is always at the expense of the funds available for the private business sector, which eventually affects the activity of markets and the ability to obtain funds from banks without the government crowding the way.

He added that while banks still prefer to lend to the government through local debt instrument­s as a safe and comfortabl­e utilisatio­n of liquidity, they abandon their convention­al role of providing credit to other sectors in order to stimulate business and investment.

“It is known that government lending basically aims to fund a budget deficit; hence, it does not directly activate markets and generate jobs; on the contrary, providing funds to the private business sector contribute­s more to activating investment and reducing rates of unemployme­nt and creating developmen­t,” Aboul Fotouh said.

 ??  ?? According to the CBE, total non-government­al loans from banks were estimated to be EGP 1.08tn
According to the CBE, total non-government­al loans from banks were estimated to be EGP 1.08tn
 ??  ?? Banking expert Hany Aboul Fotouh
Banking expert Hany Aboul Fotouh

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