Friday,15 December, 2017
Current issue | Issue 1285, (3 - 9 March 2016)
Friday,15 December, 2017
Issue 1285, (3 - 9 March 2016)

Ahram Weekly

Bid to attract expatriate dollars

New dollar-denominated savings certificates are being offered to Egyptians working abroad with the aim of attracting their savings, writes Hayat Hussein

Bid to attract expatriate dollars
Bid to attract expatriate dollars
Al-Ahram Weekly

Egypt’s three state-owned banks are preparing to launch advertising campaigns in countries that have a large number of expatriates to promote the sale of new US dollar-denominated certificates to Egyptians living abroad.

The National Bank of Egypt (NBE), Banque du Caire and Banque Misr will offer US dollar-denominated certificates to Egyptian expatriates at a minimum subscription price of $100 in an attempt to attract their savings, Immigration Minister Nabila Makram Ebeid said on Monday.

The minister added that the certificates programme had come in response to increasing demands by Egyptians abroad wanting to invest their savings in their country.

A source from Banque Misr, who preferred to remain anonymous, told Al-Ahram Weekly that the three banks will launch advertising campaigns in countries chosen by the Immigration Ministry that have large numbers of expatriates in an attempt “to guarantee that an earlier failure will not be repeated”.

 In 2012, Egypt, through the NBE, offered a three-year dollar-denominated savings certificate called Almasry in seven countries. The certificate, issued by the Finance Ministry, offered a fixed interest rate of four per cent to Egyptians living abroad. The hope was to raise some $400 million.

“But the amount raised did not exceed $174 million in the first year of issuing,” the source said.

The new certificates have maturation periods of one, three and five years, and returns will be paid in dollars at 3.5 per cent for one-year certificates, 4.5 per cent for three-year certificates, and 5.5 per cent for five-year certificates. The returns will be calculated from the day after purchase and may be withdrawn every six months, the minister said.

The certificate holders will not have the right to withdraw the value of the one-year certificate before its maturation period, but the accumulated value of the three-year certificate can be withdrawn after six months. The value of the five-year certificate can be withdrawn after one year.

The Central Bank of Egypt (CBE) has guaranteed the right to transfer the returns and values of the certificates to customer accounts outside Egypt in US dollars without a maximum transfer limit.

Expatriate remittances brought in $19.33 billion in fiscal year 2014-2015, according to data on the CBE website. They are now one of the most important sources of foreign currency for Egypt, as tourism and export revenues have been decreasing.

While Egypt hopes to collect dollar savings to support its foreign currency reserves, many analysts do not expect a high demand for the certificates. “I think the sum raised will not exceed $1 billion and Egypt needs more. But we have to do everything we can to help,” banker Ahmed Selim told the Weekly.

Egypt has been suffering from a foreign currency crunch due to political upheavals since the 2011 Revolution, which has been exacerbated by plummeting tourism revenues since the crash of a Russian airliner in Sinai last October. The country’s foreign reserves stood at $16.5 billion in January.

Egypt cut its economic growth forecast for the current fiscal year after the crash, according to Finance Minister Hani Kadri. The revision, to a range of four to 4.25 per cent from a previous estimate of five per cent, underlines the challenges the country is facing, Bloomberg reported.

Egypt has largely relied on Gulf Arab countries that have pumped in tens of billions of dollars in aid, grants and investments since the ouster of Islamist former president Mohamed Morsi in July 2013.

There have been severe foreign currency shortages thus far this year, resulting in a further fall in the value of the pound against the US dollar, now at more than LE9 to the dollar on the black market.

 

The writer is a freelance journalist.

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