Egypt banks to help foreign firms repatriate profits
28 Feb 2017 - 22:37
Cairo: Egyptian banks are set to allocate about a quarter of their excess hard currency to foreign firms seeking to repatriate profits, bankers said on Tuesday, helping ease a backlog built up before the country's pound was floated in November.
Foreign companies have struggled to repatriate profits since an uprising in 2011 that drove off foreign investors and tourists, starving the import-dependent economy of hard currency and forcing it to ration dollars.
Essential items like medicines and grains were prioritised. Foreign companies seeking dollars to repatriate profits were not.
In a move aimed at luring back foreign capital and securing a $12bn IMF loan, the central bank floated the Egyptian pound on November 3, weakening it from 8.8 pounds per dollar to almost 20 in December.
The pound has strengthened in recent weeks, trading at about 15.8 on Tuesday, as pent-up demand for dollars to finance imports has cleared.
Bankers said the central bank advised them in November to begin allocating dollars for non-essential imports as a backlog in demand for essential goods receded.
Now, bankers said, the central bank had advised them to use some of that excess to accommodate repatriation requests.
An early rush of foreign firms at the banks seems unlikely, however, given that the pound remains relatively weak, analysts said.
Bankers said they were informally advised to split foreign currency three ways after covering essential requests: 50 percent for non-essential imports, 25 percent to enter interbank trading, and 25 percent for profit repatriation.