CAIRO (Reuters) – Egypt’s central bank plans to raise the required reserve ratio on local currency deposits to 14 percent from 10 percent for domestic banks, effective Oct. 10, the bank said on Tuesday.
“In the light of the Egyptian banks’ strong financial indicators and improving performance and profitability that have been reflected in the financial and monetary stability, it is appropriate to restore the ratio back to previous rates,” the statement said.
The required reserve ratio was kept steady at 14 percent from 2001 till 2012. The central bank then cut its reserve requirement on local currency deposits to 10 percent in order to provide banks with more cash to lend to the government and businesses.
Egypt agreed a three-year, $12 billion IMF loan programme last November that is tied to sweeping reforms, including spending cuts and tax hikes.
They are designed to help revive an economy hard hit by a shortage of foreign currency and investment in the turmoil that followed a 2011 uprising.
(Reporting by Ehab Farouk; Writing by Amina Ismail; Editing by Larry King and Gareth Jones)
