Experts and analysts have emphasised that the new decision made by the Central Bank of Egypt (CBE) is a new message from the bank to global markets about Egypt’s overcoming of the foreign exchange crisis.
In 2011, the CBE had instructed banks to not allow the transfer of more than $100,000 per customer more than once a year, whether for individuals or companies except for trade and import transfers and dues of foreigners.
On Wednesday, the CBE announced removing these instructions.
Tarek Amer, governor of the CBE, said that the decision is a continuation of the procedures made by the CBE within the framework of the economic reform plan, whose implementation started last year. He stated that the decision will enhance confidence in the Egyptian economy and attract more foreign flows.
According to Amer, the decision has been in force since Wednesday. He noted that investors now can transfer their profits without constraints.
Amer added that there are no fears from this decision on foreign exchange reserves. Reserves have broken the limit of $31bn at the end of June for the first time in seven years, according to Amer.
Minister of Expatriate Affairs Nabila Makram said that the decision will reassure Egyptians abroad and increase investments. It also comes at a crucial time as a response to the demands of citizens and investors as part of the CBE’s efforts to support and facilitate banking transactions and to meet the needs of clients.
Makram noted that these facilitations show how much the CBE is adopting a wise policy that take the public’s best interest into consideration and shows the efforts made to connect Egyptian citizens to the Egyptian groups living abroad.
A senior official in a government bank said that banks started enforcing the decision since Wednesday. The source emphasised that lifting the contracts on money transfer after more than six years since the decision was applied shows that the Egyptian economy is functioning normally.
He stressed that the decision will leave a positive impact on the Egyptian economy’s indicators over the upcoming period and will enhance the flow of direct foreign investments in Egypt.
According to Mohamed Abdel Aal, member of the board of directors of Suez Canal Bank, the decision is a new step towards financial stability.
He added that each client now has the freedom to transfer his funds without constraints or conditions, still while taking the regular controls into account.
Abdel Aaal noted that the decision will stimulate foreign investors to increase their remittances to Egypt and will encourage Egyptian workers abroad to keep their savings inside their country instead of abroad.
Hany Aboul Fotouh, a banking expert, said that the CBE’s decision is in line with the expectations of the market’s with the gradual improvement of the market and the increase of foreign exchange reserves.
He added that while the decision came as a surprise, it matches the economic reforms adopted by the government once the agreement for the loan from the International Monetary Fund (IMF) was signed.
Aboul Fotoh noted that the decision was preceded by the issuance of the Investment Law and the amendments in the law of companies with the aim of improving the investment environment and placing Egypt in a competitive position that encourage investments.
He added that the CBE may have based the decision on strong reasons, including, for instance, the increase of foreign exchange reserves, Egyptians’ remittances, the obtainment of the second portion of the IMF loan, the increase of foreigners’ investments in dollar treasury bills and bonds, an increase of the supply of foreign currencies after the flotation, the elimination of the black market, as well as the reduction of importing with the growth of exports.