The Central Bank of Egypt (CBE) issued a number of new controls and decisions on Tuesday to regulate import operations and cash deposits in foreign currencies.
Sources told Daily News Egypt (DNE) that Gamal Negm — Deputy Governor of the CBE — held a meeting on Monday with foreign trade officials in the banks to answer their inquiries in this regard and that, during the meeting, a number of decisions and controls were reached, the most important of which are as follows:
First off, accepting the proceeds of cash deposits of companies in foreign currencies resulting from export operations with a number of countries — including Libya, Syria, Sudan, Iraq, Yemen — and using them in the implementation of import operations, taking into account the proportion of the value of deposits with the size and nature of the customer’s usual activity, the value of the documents indicating the export process, and the source’s completion of a true copy of the customs declaration approved by the competent customs.
This is in accordance with the two periodic books issued by the CBE on 13 May 2015 and 20 October 2015, provided that the CBE is referred to in case of export and cash deposit with any country other than the countries mentioned.
Secondly, follow up on the limit set according to Minister of Trade and Industry Decision No. 126 of 2022 that imports are released for private use up to $25,000 once every six months, while more than $25,000 are released using Form 4, taking into account compliance with the instructions of the CBE as per decision No. 49, dated 13 February 2022, and subsequent amendments.
Thirdly, regarding electronic goods that are assembled in Egypt and consist of a locally manufactured parts along with imported foreign components; the foreign component is excluded from the CBE’s decision No. 49, dated 13 February 2022, and shipping documents are accepted in light of the production requirements.
Finally, using the balances of parent companies in foreign currencies in local banks resulting from an activity to implement the import process, provided that they are sold to the bank and the bank resells them without the buying and selling margin.
According to the sources, during the meeting, a number of inquiries were clarified by foreign trade officials in banks, those inquiries being:
Are the balances of sister or affiliated companies in foreign currencies in local banks that result from the same activity being dealt with? Were they cut off on a case-by-case basis?
The CBE responded that it can be allowed for sister and affiliated companies without referring to the CBE, with the application of the same mechanism of selling to the bank and reselling without a buying and selling margin.
Is it possible for a parent or sister company abroad to provide a foreign currency loan to a subsidiary company in Egypt for periods of time from one to five years and use the loan to implement an import operation?
The CBE responded that there is no objection to this, provided that the financing period is not less than one year, that the financial statements of both parties are included, that the sources of currency are confirmed with the transferring company, and that there is no responsibility on the bank to manage the maturity, especially if the foreign currency resources are not available with the Egyptian company through its activity on the due date.
Is it possible to carry out the import process through the presence of transfers of foreign currencies resulting from dividends abroad or capital increase from the parent company, partners, or shareholders abroad?
The CBE responded that import operations can be carried out by accepting transfers from the accounts of partners or shareholders abroad resulting from dividend distributions for one of the partners or shareholders or increasing the capital of the company in Egypt from the parent company, partners, or shareholders or from any other known external source according to each bank’s discretion.
Is it possible to allow import operations to be carried out through collection documents? Whose value has been fully paid to the exporter?
The CBE responded that import operations can be carried out and the value of the receivable is fully paid by the importers until the end of the working day of 19 September 2022, explaining that for the collection documents received by banks through the exporter’s bank, the exporter’s bank sends a statement stating the details of the import operation to the local bank and confirms that the amount of the due amount has been paid in full until the mentioned date.
For the collection documents received by customers directly from the source, an invoice is obtained from the source stating that the amount of the due amount has been paid in full until the mentioned date through the Cargo X system available to banks through the pre-charge system.
Is it possible to carry out import operations using the company’s account balances in foreign currencies existing in local banks?
The CBE responded that import operations can be carried out using these balances if they exist in their accounts in local banks until the end of work on 19 September 2022.
Is it possible to carry out import operations through the use of foreign currency balances in the accounts of partners, shareholders, parent or sister or affiliated companies existing in local banks?
The CBE responded that import operations can be carried out using these balances if they are listed in their accounts in local banks until the end of work on 19 September 2022, provided that they are sold to the bank and the bank resells them without a margin of sale or purchase.
In the coming period, is it possible to carry out import operations using company account balances in foreign currencies or from the accounts of partners, shareholders, parent or sister or affiliated companies existing in local banks?
The CBE responded that these import operations are not carried out using those balances after today.
It also confirmed that it is not accepting cash deposits in foreign currencies to the accounts of Egyptian companies in light of the lack of clarity of the entire process and its violation of the law.