Access to the emergency liquidity depends on banks providing sufficient guarantees to pay back the loans
The Central Bank of Egypt (CBE) revealed that they will be launching a new program to provide emergency liquidity to local commercial banks as inflation numbers rise.
Earlier today, the Central Agency for Public Mobilization and Statistics (CAPMAS) revealeds that Egypt's annual inflation rate climbed to 6.5% in December 2021.
According to a statement, the CBE will provide liquidity to commercial banks who are unable to receive liquidity from the interbank or financial markets, offering loans at a premium of at least 5% % above the overnight lending rate for 180 days, with facilities able to be extended for a maximum 1-year period.
Access to the emergency liquidity depends on banks providing sufficient guarantees to pay back the loans, with it being provided to banks that the CBE sees have no indication” of “default in the future.”
According to the statement, commercial banks are required to have a continuous basic capital of at least 5.4% to be able to access these facilities; including requiring their first tier of capital shall not be less than 6%.
The CBE’s board of directors may extend the emergency liquidity period, it added, noting that they may amend financing conditions if the eligible bank provides the necessary guarantees to renew the financing mechanism.