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Interest rate cuts to save Egypt up to $1.54 bn – Deputy Finance Minister

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Interest rate cuts by Egypt’s central bank in August and September will reduce state costs by 20 billion to 25 billion Egyptian pounds ($1.23-1.54 billion), the country’s deputy finance minister was quoted as saying on Monday.

“Every percentage point cut in interest saves the state budget between 8 billion and 10 billion pounds a year,” Ahmed Kouchouk told Egypt’s state news agency while at an investors’ conference in Dubai.

On Thursday the central bank lowered both its overnight lending and deposit rates by 1.5% on Aug. 22 and 1% on Sept. 26. The lending rate is now 14.25% and the deposit rate 13.25%.

Egyptian pound treasury bills should remain attractive to foreign investors because the country’s economic reform programme had reduced risk, Kouchouk said.

Egypt, which finances much of its budget deficit by way of T-bills, is nearing the end of a three-year reform programme agreed with the IMF in November 2016.

Foreign investment in treasury bills had jumped to $18.3 billion as of the end of August from about $10 billion at the end of last year, Khouchouk said.

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