The Egyptian economy is awash in cash amid an unprecedented surge in liquidity, but whether this wave will translate into broad-based economic relief remains uncertain.
In March 2025, Egypt’s domestic liquidity surged to a record EGP 12.566 trillion (USD 252.22 billion), an increase of EGP 930.4 billion (USD 18.67 billion) over three months, according to data released by the Central Bank of Egypt (CBE). The sharp rise in domestic liquidity highlights mounting pressures and potential stimulus within the country’s financial system.
Domestic liquidity, often referred to as M2, encompasses the total money supply, known as M1, available within the economy, as well as cash in circulation and in all types of bank deposits. Liquidity is measured by M2 and serves as a critical indicator of economic health and banking sector stability.
The latest figures also show a notable rise in the money supply subset, M1, reaching EGP 3.209 trillion (USD 64.35 billion) in March, with currency in circulation outside the banking system climbing to EGP 1.296 trillion (USD 26 billion).
The surge is driven primarily by a jump in non-government deposits in local currency, which grew to EGP 8.195 trillion (USD 164.44 billion), and a parallel increase in demand deposits and savings certificates.
Households remain the primary holders of these deposits, with EGP 5.8 trillion (USD 116.36 billion) in term deposits and savings certificates, proving that Egyptian families play a central role in the country’s financial ecosystem. As households continued to seek protection against currency depreciation and inflation, foreign currency deposits rose to EGP 3.074 trillion (USD 61.65 billion).
The influx of liquidity is a double-edged sword. The fresh capital expands banks’ ability to lend and invest, a development that could stimulate economic growth and support job creation at a time when the country sorely needs both.
Yet the influx rekindles fears of rising inflation. Egypt has already seen inflation accelerate, particularly in food and beverage prices, taking a toll on household budgets and dampening real income growth. Analysts warn that unless managed carefully, the liquidity surge could further stoke inflation, complicating efforts to stabilize the Egyptian pound and improve living standards.
Economists caution that, without careful monetary management, the added liquidity could fuel further price hikes, complicating efforts by the CBE to stabilize the Egyptian pound and restore purchasing power and exacerbating existing economic inequalities and social strain.
Egypt’s liquidity boom comes amid a broader influx of foreign investments and loans, including USD 35 billion (EGP 1.744 trillion) from the United Arab Emirates and billions more from the International Monetary Fund (IMF), the European Union (EU), and World Bank, aimed at easing the country’s debt burden and stabilizing its finances.
The government projects a 3.5 percent growth rate for the coming fiscal year and anticipates that increased liquidity will support internal consumption and attract further private investment.
However, experts warn that the benefits may not be felt evenly or immediately. While greater liquidity can help stabilize the banking sector and support government spending, persistent inflation and currency volatility threaten to erode purchasing power and delay improvements in household welfare.
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