IMF hails CBE decision terminating repatriation mechanism

WASHINGTON - 6 December 2018: The International Monetary Fund (IMF) lauded the decision by the Central Bank of Egypt terminating the foreign investors funds Repatriation Mechanism as vital for the economic reform program.

In statements to MENA on Thursday, Chief of IMF mission in Cairo Subir Lall said the fund’s board will convene by the end of December to discuss paying the fifth tranche of the $12-billion loan.

He underlined full support for the CBE decision.

The Central Bank of Egypt decided to terminate the Repatriation Mechanism as of December 4, close of business day, for any fresh foreign currency portfolio investments wishing to enter the local currency Egyptian T-Bills, T-Bonds market and the stocks listed on the Egyptian Stock Exchange.

This will not apply to balances held inside the mechanism before the aforementioned date. Investors that initially entered through the repatriation mechanism before December 4, close of business day, may exit through the repatriation mechanism at any time. Fresh foreign currency portfolio investments, from this point forward, should be channeled through the interbank market.

The Foreign Exchange repatriation mechanism was heavily utilized by foreign investors at the initiation of the liberalization in order to guarantee liquidity. However, as the gains of the homegrown reform program became clearly demonstrated and the foreign exchange resources granted by the real economy flourished, Egypt's external balances and various economic indicators have gained considerable strength since November 2016.

Egypt's risk profile improved and its financial stability regained strength. As a result, confidence increased as was reflected in the elevated interbank market volume.