The Central Bank of Egypt (CBE) has approved a set of rules under which it would be able to provide emergency liquidity to local lenders.
Banks can apply to receive emergency liquidity if they are unable to receive it from interbank or financial markets, the central bank said.
Banks will have access to emergency liquidity only if they are solvent and for up to 180 days, it said. It will be priced at a premium of at least 5% over the overnight lending rate.
It is unlikely that banks will use the new facility, which has been discussed for more than a year, because funds available under the central bank’s overnight borrowing facility are cheaper.
As a result of the economic impact of the pandemic, Egypt’s banks are experiencing a deterioration in asset quality.
A government support package for the hardest-hit sectors helped the economy grow in 2020 and 2021.
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