Banking regulations in Egypt centred on financing imports could help the country save about $20bn, according to Egypts central bank governor Tarek Amer.
The rules to curb, what Amer described as unnecessary imports in an interview with new agency Bloomberg, will also help Egypt address the foreign exchange crisis, that is threatening the nations economic recovery.
The largest demand for foreign exchange comes from imports, so these measures are a quick fix to improve the balance of payments, Amer said. Egypt has been flooded with cheap, low-quality goods and we are trying to regulate this market.
Egypt has tightened rules to finance the imports of goods deemed non-essential and have asked importers to register their foreign suppliers with the government. Egypt imported $61bn worth of goods in the fiscal year that ended June 30, almost three times the value of its exports.
Amer took charge in November amid a national debate on currency policy, with investors criticising his predecessor over measures that included restrictions on dollar cash deposits at banks to crack down on black market trading. Policy makers have since taken steps to bolster confidence in the local currency as they attempt to counter speculation of an imminent devaluation.
The central bank in November unexpectedly appreciated the pound, which is subject to a managed float, by 2.6 per cent. It then paid back the arrears owed to foreign stock and bond investors.
Foreign-currency reserves, while down by more than 50 per cent since the 2011 uprising that ousted President Hosni Mubarak, have stabilised in the last four months at more than $16 billion. The central bank raised interest rates by 50 basis points on Dec. 24 and said it seeks, in coordination with the government, to avoid double-digit inflation rates over the medium term.
Egypts economic growth will likely slow to 3.5 per cent this year from 4.2 per cent in 2015, according to a Bloomberg survey of 11 economists. Amer said the economy was performing better than official numbers suggested.