Egypt, China to renew currency swap deal: CBE governor to AACB

Loay Wael , Wednesday 8 Aug 2018

IMF agreement extended

The Governor of the Central Bank of Egypt (CBE) Tarek Amer announced in a press conference Wednesday on the sidelines of the AACB meetings in Sharm El-Shiekh that Egypt and China are willing to renew their currency swap deal by the end of this year.

The CBE signed a bilateral currency swap with the People’s Bank of China (PBC) for 18 billion yuan against the equivalent in EGP in December 2016.

Amer also said that extending Egypt's agreement with the International Monetary Fund (IMF), which ends next year, is a purely governmental decision.

In mid-August 2016, Egypt reached a staff-level agreement with the IMF over the three-year $12 billion loan to endorse the country’s fiscal reform programme, which the government embarked on in 2014 in an attempt to curb the growing state budget deficit.

With their latest approval of the fourth tranche last June, the IMF had disbursed $8 billion in total out of the $12 billion loan to Egypt.

Last May, the IMF issued its third review of Egypt's reform programme, praising the steps taken by the government in implementing its reforms.

''The extension of the agreement is the government's decision, not the IMF's,'' Amer said.

“The reform programme is fully Egyptian; we survived a crisis that could bring us into more severe circumstances.'' Amer added.

Amer also noted that the currency exchange agreement with China is to be renewed with $2.7 billion next December, and this agreement states that trade between the two countries is to take place with their local currencies, not the US dollar.

Amer pointed to the fact that Egypt was in danger before the floatation due to the presence of a currency black market, with nearly $9 billion traded offshore and bought from parties who aim to destabilise the economy.

''During the roughest circumstances Egypt was able to pay back its debts on time,'' the governor affirmed.

Amer also dismissed claims that the USD will reach 20 EGP, saying that this is “based on unsubstantiated information,” adding that there is a currency reserve of $44 million.

The IMF said following its third review last month that Egypt remains committed to continuing energy subsidy reforms to achieve cost-recovery prices for most fuel products by 2019.

Egypt's Prime Minister Mostafa Madbouly inaugurated on Wednesday the Association of African Central Banks (AACB), the first to be hosted by Egypt in the Red Sea resort town of Sharm El-Sheikh.

The 41st AACB meeting is attended by a number of regional and international institutions, including the International Monetary Fund (IMF), the World Bank, the African Union Commission, the European Central Bank, the Federal Reserve Bank of New York and the Common Market for Eastern and Southern Africa (COMESA).

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