Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

EGYPT

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: January 2, 2005.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Banks have been instructed to freeze accounts and assets of listed persons and organizations associated with terrorism. These measures were taken in accordance with the relevant UN Security Council resolutions. Further, the authorities have established the Financial Intelligence Unit, which coordinates all issues related to money laundering and financing of terrorism.
Other security restrictionsRestrictions are in effect against Libya.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of the Arab Republic of Egypt is the Egyptian pound.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementAlthough Egypt maintains de jure a managed float with no predetermined path for the exchange rate, the exchange rate between the dollar and the pound has remained stable since 2006. Banks, signatory to the interbank convention on foreign exchange trading, buy and sell foreign exchange at freely determined rates. The Central Bank of Egypt (CBE) buys and sells foreign exchange daily at the rate prevailing in the interbank market.
Authorized nonbank foreign exchange dealers may buy and sell domestic and foreign means of payment (banknotes and traveler’s checks) on their own accounts. These transactions are conducted in cash. However, nonbank ADs are not permitted to deal in transfers into or out of the country; they must sell all working-day foreign currency surpluses in excess of their authorized operating balances to commercial banks. Effective June 8, 2006, Decree No. 40 of 2006 provides for intraday adjustment of the CBE’s exchange rate for official transactions.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized commercial banks are permitted to conduct forward foreign exchange transactions for their own accounts. No prior approval by the CBE is required, and the banks are free to determine the rates for forward transactions.
References to legal instruments and hyperlinksDecree No. 40 of 2006; www.cbe.org.eg.
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 settled in any foreign currency. Settlements with Sudan are made in accordance with the terms of a bilateral agreement.
Controls on the use of domestic currencyn.a.
Use of foreign exchange among residentsn.a.
Payments arrangements
Bilateral payments arrangements
InoperativeAn account denominated in clearing pounds sterling has been set up to liquidate debts owed to FSU countries under terminated bilateral payments arrangements. There is an inoperative agreement with Sudan.
Regional arrangementsEgypt is a member of 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.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeBanks are not authorized to deal or speculate, on their own or their customers’ accounts, in precious metals.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers may take out up to LE 5,000.
Foreign currencyAmounts exceeding the equivalent of $10,000 must be declared on exit.
On imports
Domestic currencyTravelers may bring in up to LE 5,000.
Foreign currencyAmounts exceeding the equivalent of $10,000 must be declared on entry.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyBalances may be converted through the foreign exchange market.
References to legal instruments and hyperlinksn.a.
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 payments in Egypt.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Letters of creditMargin deposits for LCs opened by importers for trading purposes are 100%.
Import licenses and other nontariff measures
Negative listMost items may be imported freely. Automobiles can be imported only during the year of their manufacture. Imports of telecommunications equipment require permits from the National Telecommunications Regulatory Authority. Imports of used telecommunications materials for trading purposes are prohibited.
Other nontariff measuresAll importers are required to register with the General Organization for Export and Import Control (GOEIC) within the Ministry of Foreign Trade and Industry.
All registered importers must be Egyptian nationals and fulfill a number of other conditions, including financial liability and the presentation of a proven record of past commercial activities. For registration, importers must also provide details of the products they intend to import. Payments for imports must be made through a bank operating in Egypt.
Import taxes and/or tariffsProducts are classified into six groups for customs purposes, with tariff rates ranging from 2% to 32%, with two exceptions. Amendments to import tariffs have been introduced by Law No. 39 of 2007.
State import monopolyImports of liquefied petroleum gas, butane, and oil are allowed only by the state-owned Egyptian General Petroleum Corporation and Egyptian Gas Holding Company. Some other petroleum products may be imported by the private sector.
References to legal instruments and hyperlinksLaw No. 39 of 2007.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExporters must register with the GOEIC. They need to fulfill a minimum capital requirement of LE 3,000 and must have a clean criminal record. Public sector or government employees are not allowed to register as exporters.
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo controls apply to these payments.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securities
Bonds or other debt securities
Sale or issue locally by nonresidentsApproval by the Capital Market Authority is required for issuing bonds.
Controls on derivatives and other instrumentsDerivatives exist in the Egyptian market only for genuine hedging purposes.
Purchase locally by nonresidentsn.r.
Sale or issue locally by nonresidentsn.r.
Controls on credit operations
Commercial credits
To residents from nonresidentsNo controls are applied; however, ministries, government agencies, public authorities, public sector companies, and the private sector are all required to register their debt obligations with the CBE.
Financial credits
To residents from nonresidentsResidents are required to register their foreign debt with the CBE for statistical purposes.
Controls on direct investment
Inward direct investmentNonbank companies of foreign exchange dealers must be owned entirely by Egyptians. All foreign direct investments need to be registered by the General Authority for Investment pursuant to Law 8/1997 and Law 159/1981.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsDeposits in foreign currencies held by either Egyptian or foreign nationals are subject to a 10% requirement, which must be deposited with the CBE, and are remunerated at LIBID. The reserve ratio requirement for deposits in Egyptian pounds (excluding savings certificates with maturity of more than three years) is 14%, and these deposits are not remunerated.
Liquid asset requirementsThe requirements for assets in foreign currencies and Egyptian pounds are 25% and 20%, respectively.
Investment regulations
Abroad by banksAs a supervisory tool to protect against risk concentration, all banks operating in Egypt (except branches of foreign banks) are prohibited from depositing or having investment securities with a foreign bank valued at more than 40% of their capital base or 10% of their total investment abroad, whichever is lower. The total face value of the shares in these companies owned by a bank (excluding trading securities) may not exceed the value of the bank’s capital base.
In banks by nonresidentsEgypt applies “fit and proper tests.” Shares held by residents or nonresidents in any bank in Egypt that exceed 10% of the bank’s capital require approval from the CBE board of directors.
Open foreign exchange position limitsThe limit for each currency (local or foreign) is 10% of Tier I and Tier II capital. The limit for total long or short positions is 20% of Tier I and Tier II capital.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidentsYes.
Limits (max.) on investment portfolio held abroadYes.
Limits (min.) on investment portfolio held locallyYes.
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange measuresJune 30. The IMF staff review of Egypt’s exchange system concluded that Egypt’s exchange system was free of restrictions and multiple currency practices.
Exchange arrangementJune 8. Decree No. 40 of 2006 provided for intraday adjustment of the CBE’s exchange rate for official transactions.

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