Cairo finally admits foreign borrowing is necessary

Egypt's dependence on local borrowing to support the state budget is not sustainable and it will have to borrow from overseas, a state newspaper quoted Finance Minister Hazem Al Beblawi as saying yesterday. Local banks are lending heavily to the government as it seeks funds to cover a ballooning budget since a popular uprising toppled President Hosni Mubarak in February, and treasury yields have risen steadily. "It was the norm that we borrowed from T-bills with rates within 9 to 10 per cent. Now they have reached 13 to 14.4 per cent, and this is a very serious issue for the treasury and for the national economy," daily Al Ahram quoted Beblawi as saying.