The government will seek US$11.2 billion in loans during this month after expectations that fuel price hikes are to increase inflation rates to more than 10 percent.
The Finance Ministry declared intentions to obtain a LE80.5 billion loan, equal to $11.2 billion, in September from local banks via issuing treasury bills and bonds.
An informed source from the ministry pointed to an increase in loaning during the first quarter of the year, compared to last year. The government loaned LE224.5 billion this year, compared to LE200 billion last year due to increase in financing requirements by beginning of the fiscal year.
In related news, Central Bank of Egypt (CBE) Governor Hesham Ramez disclosed purchase of treasury bills and bonds at $120 million by foreigners during the past month and half, which indicates to improving economy.
Fakhry al-Feqqi, former director of International Monetary Fund (IMF), said the expansion of loans was due to an increase in spending on road paving, schools and universities.
Speaking to Al-Masry Al-Youm, Feqqi warned of the dangers in increasing local loans, calling on the government to stick to the budget.
Edited translation from Al-Masry Al-Youm
