Will Egypt monetise its budget deficit?

There are mounting concerns about the prospect of deficit monetisation in Egypt. Indeed, thereappears to be some evidence that the central bank is already financing the budget shortfall, albeiton a small scale. However, we think widespread deficit monetisation would only be used as a lastresort. Instead, we think that the authorities are likely to continue leaning on the banking sector topurchase government debt, although this will come at the cost of weaker private sector activity.