IMF, foreign countries to plug Egypt's 2016/17 funding gap: CBE governor

Bassem Abou Abass , Thursday 3 Nov 2016

Tarek Amer
Egyptian Central Bank Governor Tarek Amer speaks during a press conference at the Central Bank of Egypt in Cairo, Thursday, Nov. 3, 2016. Egypt devalued its currency by 48 percent on Thursday and announced the pound would be allowed to float — measures that meet a key demand by the International Monetary Fund in exchange for a $12 billion loan over three years to overhaul the country's ailing economy. (AP)

The governor of the Central Bank of Egypt (CBE) announced Thursday that the CBE has received assurances from the International Monetary Fund (IMF), G7 countries, China and a number of Arab countries that they will provide aid to help plug the Egypt's funding gap.

The Funding gap for the government's budget in 2016/17 was estimated at $16.2 billion, CBE Governor Tarek Amer said, adding that Egypt’s foreign exchange crisis was due to the budget deficit.

Amer made the comments at a press conference hours after the decision by the CBE to float the Egyptian pound.

During the presser held at the CBE headquarters in downtown Cairo, Amer revealed that the bank provided local lenders with $1.2 billion this month to import basic commodities for six months.

“After today’s [liberalisation of the exchange rate], the dollar’s yield at the Egyptian banks rose eight-fold,” Amer said.

“The exchange rate becomes the responsibility of the Egyptian banks, which have one of the best financial positions among the emerging markets,” Amer said.

Accordingly, the rate of the US dollar will vary between local lenders and will no longer be set at fixed price. 

However, he said that “the CBE will always be ready to intervene to reform the exchange rate in order to control the prices in the market,” adding that the government was still targeting $25 billion in foreign reserves, which currently stand at $19.6 billion.

“We are expecting the reserves to be raised by $6 billion in the coming months,” Amer said.

Amer also said that there no restrictions on the withdrawing or depositing of dollars for essential imports for individuals or companies.

Limits on credit and debit cards abroad to be revised by banks, not the CBE, Amer added.

Several major banks in Egypt have imposed limits for Egyptians using debit and credit cards abroad. 

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