Egyptian Banks to receive $19.2B since flotation: CBE

CAIRO – 18 April 2017: Total flows of foreign exchange reserves reached $19.2 billion since the flotation of the Egyptian pound in November 2016, according to a Central Bank of Egypt (CBE) statement Tuesday.

The CBE opened letters of credit (LC) worth $6.34 billion for importing petroleum products during 2016, according to a CBE statement Tuesday.

LC is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

In December 2015 the CBE adopted a policy to control imports as an attempt to reduce fraudulent import valuations and to reinforce the national economy by strengthening the competitiveness of domestic products against imports.

The policy aimed to reduce demand on hard currency as banks were suffering from a lack of dollars on the back of the political turmoil that hit the country after 2011’s January 25 Revolution, which led to an economic challenge clearly appeared as a significant decline in rates of tourism and exports.

Under the pressure of a greenback shortage, the CBE was forced to float the Egyptian pound. Egyptian foreign reserves amounted to nearly $29 billion as announced by Prime Minister Sherif Ismail last week, up from around $15 billion after the revolution.

“The bank has opened LCs worth $24 billion for foreign trade transactions since the flotation in November 2016,” the governor of the CBE said in an earlier statement.