‘No more’ currency black market, Egypt central bank governor says

Egypt says its war on the currency black market has been a success as ministers outline a 15 year economic road map to lure investors.

Egyptian prime minister Ibrahim Mahlab, right, with central bank governor Hisham Ramez during the investment summit in Sharm El Sheikh. Amr Abdallah Dalsh / Reuters

Egypt’s central bank governor has declared that the black market for currencies has been wiped out entirely.

“There’s no black market anymore,” Hisham Ramez told businessmen gathered in Sharm El Sheikh.

He was speaking alongside the prime minister, Ibrahim Mahlab; the finance minister, Hany Kadry; and the planning minister, Ashraf El Araby, who were outlining the government’s plans for widespread reforms to make the country more attractive to investors.

Until February the official exchange rate had been about 7.18 Egyptian pounds to the US dollar for well over a year, but on the black market it had been trading as low as 7.80 or 7.90.

Over three weeks, the bank allowed the pound to slide by about 6 per cent and placed daily limits on the amount of foreign currency businesses and individuals were allowed to deposit in banks. The idea was to discourage people from selling the Egyptian pound and depressing its price.

Even though the central bank had been spending billions of dollars a year to defend the currency, commercial banks often ran out of dollars, forcing importers to turn to the black market, an act that was technically illegal but tolerated by the government.

The bank in late February warned money changers not to buy or sell currency except at government-approved rates.

Mr Ramez said the central bank had introduced technical tools to stop “abnormal activities and ensure a uniform exchange rate price, which we did achieve”.

He said: “We imposed some regulations – technical regulations – and we eliminated the whole parallel market.”

Some businessmen say that while dollars have become easier to obtain, banks are still not able to fulfil their needs.

At the conference’s opening on Friday, the UAE, Saudi Arabia and Kuwait each pledged $4 billion dollars to Egypt for a total of $12 billion – some of it as direct deposits with the central bank, which should boost its war chest to support the pound.

Mr El Araby outlined a plan to place Egypt’s economy among the world’s top 30 by 2030, in absolute size as well as in competitiveness and happiness.

This includes a series of megaprojects such as the expansion of the Suez Canal, the creation of economic zones along its banks, the reclamation of desert land, the construction of a million homes, the expansion of public transport and the establishment of development corridors in various parts of the country, Mr Kadry said.

The country has begun a programme of administrative reforms that includes an investment law passed last week.

The finance minister said investors were “piling up” to take a stake in the Suez Canal project, which he said would become a world logistics centre, in activities as diverse as road building and water treatment.

Mr Kadry said that the government had put in place policies to limit employment in the country’s bloated bureaucracy.

Along with increasing the price of subsidised energy, the government has readjusted previously announced projects to make them less a burden on the budget. The state has also changed its sales tax system to a fully-fledged value-added tax that would be “clean and fair”, he said.

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