Egypt's central bank widens exceptions on import restrictions

Ahram Online , Tuesday 23 Feb 2016

The Central Bank of Egypt excluded manufacturing inputs from the requirement on importers to provide 100 percent cash deposits on their letters of credit

Central bank of Egypt (Reuters).

Egypt's central bank excluded manufacturing inputs, spare parts and computers from a measure requiring importers to provide 100 percent cash deposits at banks on their letters of credit, the bank said in a statement on Monday.

The central bank raised in December the requirement from 50 percent in an attempt to boost domestic production against foreign competition and shore up limited resources of the hard currency.

Imports of medicines, input materials for pharmaceuticals and babies' milk were excluded from the decision.

The blow to Egypt’s main sources of foreign currency -- tourism and foreign direct investments -- following the uprising in 2011, has starved Egypt of hard currency.

As importers sought foreign currency from a growing black market, pressuring the value of the pound, the central bank has taken measures to control the market.

The CBE imposed last year a cap on foreign currency deposits of $10,000 per day and $50,000 per month to limit the acquisition of dollars through unofficial channels. However, in January the daily cap was lifted and the monthly deposit ceiling was expanded to $250,000 for staple imports.

Earlier this month, the bank made an exception for travelers entering Egypt from the deposit cap as long as they are able to prove the source of their hard currency.

Egypt's foreign currency reserves stood at $16.477 billion at the end of January, down from $36 billion in 2010.


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