Egypt allows foreign companies to keep capital in foreign currency

Ahram Online , Tuesday 16 Jan 2024

Foreign companies can now retain their capital increase deposit in foreign currency, rather than having it converted to Egyptian pound by the bank, allowing them to utilize it later for the procurement of production inputs.

Hossam Heiba, GAFI s chairman.
Hossam Heiba, GAFI s chairman.


This decision, made jointly by the General Authority for Investment and Free Zones (GAFI) and the Central Bank of Egypt (CBE), aims to alleviate the economic pressures within the country's current crisis.

GAFI Chairman Hossam Heiba stated that the objective of this decision is to provide foreign currency to companies, particularly those lacking dollar liquidity, so they can acquire essential raw materials and manufacturing supplies.

Heiba further noted that the decision came into effect several weeks ago.

As part of the process, companies are required to submit a document to GAFI from the bank, indicating the transfer value and confirming the retention of the company's foreign currency, Heibe added in press statements.

“GAFI has intensified its efforts not only to promote investment in 2023 but also to relieve the burdens faced by companies operating in Egypt, which contribute positively to Egypt's global investment reputation,” he indicated.

He further highlighted that the recent depreciation of the Egyptian pound against the US dollar has motivated more than 30 foreign companies to reinvest their profits in expansion rather than converting them into foreign currency.

Egypt has experienced three devaluations of its currency since March 2022, resulting in a loss of over 70 percent of its value against the US dollar.

It is widely anticipated that a fourth devaluation will likely occur in the first quarter of 2024.

Heiba added that GAFI's electronic platform has received over 1,500 applications thus far for the establishment of new companies, indicating the interest of European, Asian, and Arab businesses in the Egyptian market.

These initiatives are part of Egypt's broader plan to attract $100 billion in foreign direct investments (FDI) between 2024 and 2030.

The plan involves granting incentives to priority sectors and establishing an agency dedicated to promoting Egyptian investments abroad, he concluded.

These endeavors came as part of Egypt’s plans to empower the private sector and boosting its contribution to the economy from 60 percent to 90 percent by 2030.

Egypt is actively intensifying efforts to empower private sector as part of its commitments under the country's $3 billion loan agreement with the International Monetary Fund (IMF) signed in 2022.

Under the IMF agreement, the government aims to offer 35 state-owned companies to IPO to strategic investors by the end of June 2024, with the aim of attracting $5 billion.

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