• Interest rates around the world: 15 countries exceed 15%, 20 "zero" and 4 countries are negative


    * Ikrami Abdullah from Riyadh


    Argentina, Suriname and Turkey topped the world as the highest of interest rates on deposits with the Central Bank for one night at 57.3 per cent, 25 per cent and 24 per cent, respectively.

    While 20 countries use monetary policy based on zero interest, and four countries with negative interest, Japan, Sweden, Denmark and Switzerland, by -0.1 per cent, -0.3 per cent, -0.7 per cent and -0.8 per cent, respectively.

    According to the analysis of the report unit in the newspaper "AlEqtisadiah" that based on data from Central Banks of countries, the International Monetary Fund, the World Bank and Reuters data, interest rates exceed 15 per cent in 15 countries around the world, in addition to 15 other countries with interest rates ranging between 10 per cent and 15 per cent.

    Therefore, the total number of countries with interest rates exceeded 10 per cent to about 30 countries.

    The relevant "interest rate" in the report is the price paid by the central bank for commercial bank deposits for one night.

    This price is indicative of interest rates between commercial banks and interest between banks and individuals that should not be less than the price of the central bank.


    The Central Bank's interest rate helps control the supply of money in circulation by changing this price up and down in the medium term, which is raising interest means curbing borrowing and thus reducing the liquidity ratio in the market, leading to lower inflation (higher prices) and vice versa.

    The reasons for raising interest rates vary in individual countries, but they are usually raised in response to the decline in the exchange rate of the national currency, as well as inflation (rising prices of goods and services).

    On the other hand, negative interest is often used to push banks to lend in order to face the deflation of the economy and the contraction of inflation and to reduce the currency exchange rate to support exports.

    Egypt and Sudan lead the Arab countries with the highest interest rates on deposits with 16.75% and 15.7%, respectively.

    Qatar and Bahrain are in the lead with a 2.4%, followed by Saudi Arabia with an interest rate of 2.3 per cent, Oman by 1.95 per cent, the UAE by 1.75 per cent, and Kuwait with the lowest interest rate of 1.5 per cent.


    It is noteworthy that the Saudi Arabian Monetary Agency "SAMA" raised the repo rate to 3 per cent in December after the reverse repurchase agreements were raised to 2.5 per cent that was following the lift by the US Federal Reserve, as the Saudi riyal is pegged to the US dollar.

    Repo agreements is the lending rate from Saudi Arabian Monetary Agency (SAMA) to Saudi banks.

    Reverse repo agreements is the interest rate that the banks obtain when depositing their money with SAMA.



    Interest worldwide

    Argentina, Suriname and Turkey topped the top three countries in the world with the highest deposit rates at 57.3 per cent, 25 per cent and 24 per cent, respectively

    They are followed by Venezuela and Haiti with interest rates of 21.8 per cent, and 20 per cent, respectively.

    They are followed by Iran and Ukraine at the sixth and seventh levels with 18 per cent each.

    In the Eighth place, Ghana comes with 17 per cent, and in the 10th is Egypt by 16.75 per cent, then Angola and Sierra Leone each with 16.5 per cent, and Uzbekistan and Malawi at 16 per cent each.

    In the 14th and 15th place came two Arab countries, Sudan and Yemen, at an interest rate of 15.7 per cent and 15 per cent, respectively.

    The list of top 15 countries in terms of interest rates includes three Arab countries (Egypt, Sudan, Yemen).


    Zero interest

    Of the world's countries, Central Banks in 20 countries have used zero interest rates: Austria, Belgium, Bulgaria, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.

    Notably, all European countries are experiencing a slowdown in economic growth and low inflation rates.

    Thus, their Central Banks resorted to zero interest to support lending to drive growth rates, and to increase inflation to economically advantageous rates.


    Negative benefit

    On the other hand, four countries adopted monetary policy on negative interest rates, which are Japan, Sweden, Denmark and Switzerland, by -0.1 per cent, -0.3 per cent, -0.7 per cent, and -0.8 per cent, respectively.


    Arab interest

    Egypt and Sudan topped the Arab interest rate by 16.75 per cent, and 15.7 per cent, respectively.

    They are followed by Yemen, Djibouti and Lebanon by 15 per cent, 11.3 per cent, and 10 per cent, respectively.

    On the other hand, the Comoros and Morocco were the least countries with interest rates of 1.1 percent and 1.5 per cent, respectively.


    Interest in the Gulf Countries

    The six Gulf countries have been at the center of the list almost globally and in Arab countries at moderate interest rates in most countries.

    Qatar and Bahrain topped them with 2.4 percent, followed by Saudi Arabia with a 2.3 per cent interest rate, Oman by 1.95 per cent, the UAE by 1.75 per cent, and Kuwait with the lowest interest rate of 1.5 per cent.


    Interest rate

    Interest rate is a key tool for central banks to control the country's monetary policy, where the central bank raises interest when the rate of inflation in the economy (increase in prices of goods and services), and thus increase the interest on deposits is increasing demand for people to deposit.

     Liquidity is withdrawn from outside the banking sector.

    Also, when interest rates rise on loans, borrowing costs rise.

    People and business borrowing are falling, spending and consumption are falling, inflation is falling, and vice versa.

    One of the disadvantages of raising interest rates is the increase in the movement of hot money entering non-productive sectors such as banks, stocks and bonds, investors fear entry into the market in light of the high cost of lending and prompted many companies to postpone expansion and the lack of new projects.

    Consequently, borrowing rates are lower than banks.


    It is also negative to raise the yield on treasury bills and bonds, which ultimately lead to the aggravation of domestic debt, in addition to blocking investors' funds from contributing to development operations.

    Because of the increased cost of lending to the private sector, the local investor will put money in banks because they are more useful and useful than their investment in any other form.

    Because of the rate hike affected by the stock market, liquidity flows from stocks to deposits in search of safe haven or investors reluctant to trade in securities to borrow at high interest rates.


    The "negative benefit" means that in cases of economic contraction and deflation of prices, individuals and companies accumulate money in banks instead of spending and investment.

     Here, central banks resort to cutting interest rates on their bank deposits to below zero in order to drive these banks to lend these funds to individuals and companies, which entails the payment of spending costs rise (inflation) to economically useful levels.

     Investment is also increasing, and the overall economy is recovering.

    Negative interest rates also reduce the price of the currency by giving a competitive price advantage to exporters in foreign markets.


    * Economic Reports Unit

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