CBE forces banks to notify it before providing foreign currency to government institutions

Hossam Mounir
2 Min Read
CBE Sub-Governor at the Banking Supervision Unit Tarek Fayed.

Banks operating in the local market provided $21bn to finance imports since the flotation of the pound on 3 November 2016 until the end of February 2017, according to Tarek Fayed, the deputy governor of the Central Bank of Egypt (CBE).

Fayed said in a statement on Wednesday that banks have repaid documentary collections (D/C) and letters of credit worth $14bn and opened letters of credit worth $7bn.

Banks depend on sales of foreign currency of individuals to form its dollar proceeds, along with interbank market and dollar loans from abroad.

According to a senior banker, the import operations financed by banks since the flotation of the pound have so far included essential and non-essential goods.

He pointed out that the National Bank of Egypt (NBE) and Banque Misr acquired a large share of the size of funds injected to finance foreign trade during the last period.

Production inputs, food commodities, and medicines topped the commodities financed by the banks for import.

The CBE obligated the banks to notify it before providing any governmental entity with foreign currency, including the general economic authorities, public sector companies, and the general business sector, as well as contractors and suppliers who deal with these companies without a minimum.

The CBE said that those instructions came under the directives of the prime minister, in an effort to adjust the exchange rate of the Egyptian pound against other currencies.

The governmental authorities acquire a large share of foreign exchange, and banks provide it to their customers, whether to finance import operations or to repay external obligations.

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