The bank raised the monthly limit to $250,000 from
$50,000 for importers of food, machinery, spare parts, capital goods and
medicine, according to a statement posted on its website on Tuesday.
Policy makers removed a daily ceiling for the same group of importers as
long as they don’t exceed the monthly cap.
Under Governor Tarek Amer, who took charge of the
central bank in November amid a national debate on currency policy,
authorities have taken steps to bolster confidence in the Egyptian pound
and counter speculation of an imminent devaluation. The bank repaid
foreign portfolio investors and introduced tighter regulations on
imports.
“It is a positive step,” said Ziad Waleed, an
economist at Cairo-based investment bank Beltone Financial. “Given that
the majority of Egypt’s imports fall under the CBE classification of
basic goods, today’s decision will definitely be positive for economic
activity.”
The dollar deposit restrictions were introduced by
Amer’s predecessor to crack down on black market trading and preserve
foreign reserves. At more than $16 billion, foreign reserves are down by
more than 50 percent from their 2010 levels, though they have
stabilized in the last four months.
Business Activity
Critics blame the rules for hindering the recovery of
the private sector, which contracted nine out of 12 months last year,
according to the Emirates NBD Purchasing Managers Index.
The central bank kept the $50,000 monthly limit in place for individuals and other types of companies.
Amer said in an interview this month that rules to
curb what he described as unnecessary imports may save about $20 billion
this year, improving the balance of payments. Authorities have
tightened rules to finance the imports of goods deemed non-essential and
have asked importers to register their foreign suppliers with the
government.
Waleed said Tuesday’s announcement makes it “clear that central bank is serious about regulating imports.”
The central bank’s Monetary Policy Committee will meet
on Jan. 28 to review interest rates. The bank raised borrowing costs 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.”
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