The Central Bank of Egypt (CBE) announced that the total value of banknotes issued reached EGP 352.896bn in May, compared to EGP 342.842bn in April—an increase of EGP 10.054bn.
The CBE said in its report that the banknote issuance to GDP percentage recorded its highest level in May since June 2015, reaching 12.73%.
In June 2015, the banknote issuance to GDP percentage recorded 12.87%; its highest level during the last five years was 14.33% in June 2013.
The CBE issued EGP 185.863bn worth of EGP 200 notes and EGP 126.769bn worth of EGP 100 notes, according to a survey conducted by Daily News Egypt.
The CBE also issued EGP 28.793bn in EGP 50 notes; EGP 5.27bn in EGP 20 notes; EGP 2.78bn in EGP 10 notes; EGP 1.891bn in EGP 5 notes; EGP 1bn worth of EGP 1 notes; EGP 364m in 50 piastre notes; and EGP 166m in 25 piastre notes.
The CBE has been widely criticised due to the expansion in its issuance of banknotes.
The bank defended its situation in many statements, asserting that the banknote issuance is conducted in accordance with economic and legal standards. The bank pointed out that the banknote issuance does not contradict the stability of prices in the domestic market.
The CBE said that the annual growth of the banknote issue came in line with the average annual growth of GDP, as well as the generally accepted economic principles.
Ezz El-Din Hassanein, banking expert and general manager of a bank operating in the domestic market, said that the CBE is compelled to issue new banknotes monthly in response to the decline in the state resources and the increase in expenses.
He added that since January 2011 the CBE has dramatically increased the banknote issuance to meet the government’s demand for cash. It came as a result of the annual increases in salaries, wages, and pensions, in addition to compensations and the repayment of the domestic debt.
The banknote issuance in Egypt is subject to Banking Law 88/2003. Article 107 of this law stipulates that only the CBE is entitled to the banknote issuance. CBE’s board of directors also has the right to determine the categories and specifications of the banknote issue.