Egypt's Central Bank to allow foreign currency facilities for importers

The Central Bank of Egypt is to allow banks to refinance imports by providing temporary foreign currency facilities

Egypt's central bank will permit banks to refinance importing operations for clients by providing “temporary facilities in foreign currency” based on the bank's credit evaluation.

The information was provided in a statement dated 14 January and posted on the central bank’s website on Monday.

The central bank law of 2003 allowed such financing only to borrowers who could show they had enough foreign currency resources to repay them.

“They are relaxing the rules for trade financing by allowing banks to lend to clients who don’t possess the foreign exchange resources. It will allow them to get around the shortage of foreign exchange liquidity, so that business activities are not interrupted,” said Mohamed Abu-Basha, an economist at Cairo-based investment bank EFG-Hermes Holding SAE.

“This might help ease the situation a bit, but the problem will remain as there’s a growing gap between the demand and supply of foreign exchange in the market.”