Chapter

EGYPT

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Egypt is the Egyptian pound.
Exchange rate structure
MultipleIn addition to the market exchange rate, there is a special rate of LE 1.30 per $1 that is applied to transactions effected under the bilateral payment agreement with Sudan, and a rate of LE 0.3913 per $1 that is used for the liquidation of minimal balances related to terminated bilateral payment agreements.
Classification
Conventional pegged arrangementThe Egyptian pound is pegged to the dollar, which is used as the intervention currency by the Central Bank of Egypt (CBE). Nonbank foreign exchange dealers are permitted to operate in a free (kerb) market. They may buy and sell domestic and foreign means of payment (banknotes, coins, and traveler’s checks) on their own account. These transactions may be conducted either in cash or through their accounts maintained with authorized banks in Egypt. In addition, authorized nonbank dealers may broker any foreign exchange operation and transaction, except transfers to and from the country, on the accounts of their bank or nonbank customers. The spread between the CBE buying and selling rates for foreign exchange is about 0.50%.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized commercial banks are permitted to conduct forward foreign exchange transactions for their own account. No prior approval by the CBE is required, and the banks are free to determine the rates applied for forward transactions.
Arrangements for Payments and Receipts
Prescription of currency requirementsFor countries with which indemnity agreements concerning compensation for nationalized property are in force, certain settlements are made through special accounts in Egyptian pounds with the CBE. The balances of these accounts are minimal. Suez Canal dues are expressed in SDRs and are paid by debiting free accounts in foreign currency. Settlements with Sudan are made in accordance with the terms of the bilateral agreement.
Payment arrangements
Bilateral payment arrangements
OperativeThere is an agreement with Sudan.
InoperativeThere is an agreement with Russia to settle debts between Egypt and the Baltic countries and the other countries of the FSU.
Regional arrangementsEgypt is a member of the COMESA.
Barter agreements and open accountsYes.
Administration of controlBanks are authorized to execute foreign exchange transactions within the framework of a general authorization without obtaining specific exchange control approval.
International security restrictions
In accordance with UN sanctionsRestrictions exist against Libya.
Payment arrearsThere are limited technical payment arrears with certain non-Paris Club creditors.
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeBanks are not authorized to deal or speculate, on their own or customers’ accounts, in precious metals.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers may take out up to LE 1,000.
On imports
Domestic currencyPersons arriving in Egypt may import up to LE 1,000.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency convertible into foreign currencyBalances may be converted through the foreign exchange market.
Nonresident Accounts
Foreign exchange accounts permitted“Free accounts” may be opened in the name of any entity. These accounts may be credited with transfers of convertible currencies from abroad and transfers from other similar accounts, foreign banknotes (convertible currencies), and interest earned on these accounts. These accounts may be debited for transfers abroad, transfers to other similar accounts, withdrawals in foreign banknotes by the owner or others, and for payments in Egypt.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Letters of creditOn March 2, 1999, margins for LCs were increased to 100% from 10%.
Import licenses and other nontariff measures
Negative listMost items may be imported freely.
Import taxes and/or tariffsProducts are classified into seven groups for customs purposes, with tariff rates ranging from 5% to 50% (with several exceptions). Surcharges at rates of 2% and 3% apply to most imports.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports of raw hides are restricted.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsForeign exchange earned abroad may be held indefinitely abroad or in local free accounts.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsThere are no controls under the Foreign Exchange Law and Regulations on the issue of securities in the country by nonresidents. Trading in securities denominated in foreign currencies must be settled in foreign currencies. The foreign exchange market may be used for transferring proceeds associated with the sale of both Egyptian securities and foreign securities.
Bonds or other debt securities
Sale or issue locally by nonresidentsPrior approval of the Capital Market Authority is required for issuing bonds.
Controls on derivatives and other instrumentsDerivatives do not exist in the Egyptian market.
Controls on credit operations
Commercial credits
To residents from nonresidentsNo controls are applied if the maturity of the commercial credits is one year or less and if these credits are received by the private sector. Ministries, governmental administrations, public authorities, and public sector companies are all required to refer to the CBE when borrowing from abroad in convertible currencies, in order to register loans of more than one year. If external loans are used to finance capital goods or projects, such a transaction falls under the state investment plan.
Controls on direct investment
Inward direct investmentThere are no general controls, but nonbank companies of foreign exchange dealers should be owned entirely by Egyptians.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital movementsNo.
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchangeYes.
Reserve requirementsDeposits in foreign currencies held by either nationals or foreign nationals are subject to a 10% requirement (the interest-free reserve ratio requirement of deposits in Egyptian pounds is 15%), which must be deposited with the CBE at LIBOR.
Liquid asset requirementsThe requirement for assets in foreign currencies is 25%, and 20% for assets in Egyptian pounds.
Investment regulations
Abroad by banksAll banks operating in Egypt (except branches of foreign banks) are prohibited from depositing or having investment securities worth more than 40% of their capital base or 10% of their total investment abroad, whichever is lower, with a foreign correspondent bank. According to the Banking Law, all banks operating in Egypt are prohibited from owning shares exceeding 40% of issued capital in joint-stock companies, locally or abroad. In addition, the face value of the shares owned by the bank in these companies may not exceed the value of the bank’s issued capital and reserves.
In banks by nonresidentsShareholdings by residents or nonresidents in any bank in Egypt that exceed 10% of the bank’s capital require prior approval from the CBE Board of Directors.
Open foreign exchange position limitsThe limits are (1) for each currency (local or foreign): 10% of Tier I and Tier II capital; (2) for total long or short positions: 20% of Tier I and Tier C capital; and (3) total foreign assets to total foreign liabilities, or vice versa, not to exceed 105%.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidents and on portfolio invested abroadYes.
Limits (max.) on portfolio invested abroadYes.
Limits (min.) on portfolio invested locallyYes.
Other controls imposed by securities lawsYes.
Changes During 1999
Imports and import paymentsMarch 2. Margins for LCs were increased to 100% from 10%.

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