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The losers and the winners from the 25% certificate… What is the fate of gold and real estate?

06:19 PM

Friday 06 January 2023

I wrote – Manal Al-Masry:

Al-Ahly Bank and Egypt began selling a one-year savings certificate with an annual return of 22.5%, which is spent monthly, and 25% annually, which is spent at the end of the certificate’s term, which is the highest at the level of the banking system in many years.

While the certificate is considered to have great benefits in the face of inflation, other sectors may be affected by offering this return to investors and owners of deposits or financial surpluses.

In the following lines, we present the winners and losers from issuing a certificate with an interest rate of up to 25%, according to expert bankers and economists.


Manufacturers and service providers

Bankers confirmed to Masrawy that the 25% certificate may prompt manufacturers or investors to freeze their activity with the aim of investing in the 25% certificate, as there is no project or investment that generates a high profit of 25%.

The tendency of manufacturers and investors to invest in the certificate may lead to a rise in the rate of inflation (increase in prices) due to the lack of sufficient production and a shortage in commodity supply.

The unemployed

The effect of the high-return certificate of 25% on the attitudes of manufacturers and investors to prefer investing in it rather than continuing their activity leads to an increase in the unemployment rate.
The unemployment rate increased to 7.4% during the third quarter of 2022, compared to an average of 7.2% during the second quarter of 2022.

Loan holders secured by certificates

After issuing a certificate with an interest rate of 25%, the National Bank and Banque Misr raised the interest rate to 24% as a minimum on loans with a guarantee.

And the National Bank of Egypt and Bank of Egypt decided to raise the interest rate on borrowing against the guarantee of certificates and deposits to a minimum of 24%, with the aim of restricting customers’ attempts to return the proceeds of the loan in purchasing the certificate to 25%, according to what customer service employees told Masrawy.

The loans secured by the certificates are one of the options available to customers to obtain cash loans of up to 95% of their total value, with the aim of returning the proceeds of the loan in purchasing a car or returning the proceeds thereof to purchase another certificate or durable goods such as electrical and electronic tools.

Migration of money from competing banks

The presence of a high-return certificate in Al-Ahly Bank and Egypt creates pressures on the ability to maintain customer savings in favor of the 25% certificate, in light of the inability of any of the banks to offer this return to their customers due to the difficulty of employing it and its negative impact on their profits due to its high cost.

Some banks are afraid that some of their customers will ask to break their deposits or certificates after the decision to raise the interest rate on secured loans to 24% as a minimum, which motivates some customers to transfer their deposits in favor of the two banks.

the government

The government is among the most affected by the 25% certificate due to the difficulty of attracting liquidity at low interest rates by selling treasury bills, which pushes it to increase the interest rate on new debt issuances, which increases the interest burden on it.

Treasury bills are one of the government debt instruments, according to which the Ministry of Finance borrows in Egyptian pounds, to meet its needs to finance the state’s general budget, and in exchange for the money it gives interest.

Yesterday, the Ministry of Finance agreed to raise the interest rate on a tender for treasury bills to 21.490% for the first time in about 5 and a half years, according to data published on the Central Bank’s website.

Stock market investor

It is expected that the certificate of 25% will lead to the withdrawal of funds from investors in the stock exchange as a result of its high return compared to the high degree of risk in the capital market.

However, the issuance of the certificate is expected to stop soon, within weeks, not months, according to Mohamed El-Etreby, Chairman of Banque Misr.

Gold and real estate dealers

It is expected that the certificate will succeed in attracting savings from customers from investing in gold and real estate due to the high return offered on it.

Gold prices are witnessing a significant recovery in the recent period, and prices in Egypt have reached levels that have not been recorded before, and some expect the continuation of the gold trend towards an increase and the emergence of some indications of the possibility of the world’s demand for a state of economic recession, and thus increased resort to safe havens such as gold.


– Depositors

Customers are the most profitable from having a high-return certificate of 25%, which helps to increase their profits and obtain a monthly return that helps them pay their daily living expenses after the high rate of inflation (price increase).

Customers will have to benefit from the certificate by 25% through the existence of new savings and the difficulty of winning existing certificates to return their proceeds in the high-yield certificate.

Dollar holders

The certificate represents a 25% opportunity for dollar holders to sell it in return for purchasing the certificate, as well as motivating Egyptians working abroad to sell their remittances to buy back a certificate at a return rate ranging between 22.5% for a monthly exchange period, and 25% for an annual exchange period, i.e. depositing it in the customer’s account at the end of the certificate’s term.

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