Central Bank of Egypt - (Archive) Central Bank of Egypt - (Archive)

Central Bank to cancel $100,000 individual bank transfer limit

Wed, May. 17, 2017
May 16 Egypt's central bank governor Tarek Amer said on Tuesday the central bank would "soon" cancel a $100,000 limit on individual bank transfers.

The move to ease capital controls is in line with a timeframe set out under an International Monetary Fund programme agreed late last year. It requires Egypt to scrap the $100,000 cap on individuals' transfers abroad and a $50,000 monthly deposit cap on non-priority imports by June.

Controls were imposed after the 2011 uprising against autocrat Hosni Mubarak, to crush a black market for dollars and curb foreign currency outflows and limit the amount of hard currency an individual can transfer abroad to $100,000 per year.

"The limits of $100,000 relating to individuals will be cancelled ... We have no need for foreign currency limits," Amer told a news conference in Cairo. He did not say if the $50,000 deposit cap would also be lifted.

Egypt has struggled to revive its economy in the wake of the 2011 revolution, which drove away tourists and foreign investors, both major sources of hard currency.

A dollar shortage crippled imports and public debt ballooned, in part because of huge subsidy costs and poor tax collection.

In a dramatic move in November, the central bank floated the currency and agreed a $12 billion loan with the IMF to support its reform programme.

The move succeeded in attracting at least $8 billion in remittances into the banking system and away from the currency black market. As part of the reforms, Egypt also introduced a value-added tax and cut subsidies to curb its budget deficit. It plans to cut the deficit to 9.1 percent next year from an expected 10.9 percent this year.

"The ($100,000) is one of the very few capital controls left. This confirms Egypt's commitment to honouring its obligations under the IMF staff agreement," said Reham El-Desouky, economist at Arqaam Capital. "This is also proof of the increased availability of foreign currency in the banking system."

An IMF delegation visited Cairo last week to assess reform efforts and issued a largely encouraging statement, saying the programme was "off to a good start".

Amer said Egypt has received $8 billion in investment from 150 global investment funds over the past six months and that it will make a debt payment of $750 million to international oil companies on June 1.

"All these announcements will have a positive impact on the equity market and investor confidence in general," El-Desouki said. "Egypt is famous for promising then delivering part of the promises, but since the float they have been delivering."
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