Dollar crunch forces Egypt bank to limit use of bank cards abroad

A foreign exchange house in Cairo. (File: AP)

Egypt’s largest listed bank, Commercial International Bank (CIB), became the latest lender on Wednesday to reduce the amount of foreign currency customers can spend and withdraw abroad using debit and credit cards.

Egypt has suffered from a shortage of dollars in the banking system that has sapped its ability to import since a 2011 uprising drove away tourists and foreign investors, both crucial sources of hard currency.

Last month, Egypt's central bank wrote to bank chiefs asking that they “ensure that debit cards, including pre-paid cards, issued in local currency by Egyptian banks are only used within the country.”

The central bank later said the letter was not intended to signal a blanket ban on card use, but instead a request that banks prevent individuals from misusing debit cards to acquire large quantities of foreign currency while abroad.

CIB’s move follows similar measures taken by a number of other banks last week, including Emirates NBD Egypt.

CIB told clients on Wednesday that it would change the limits for purchases made in foreign currency using the bank’s cards from August 1.

Egypt’s foreign currency reserves have halved since the 2011 uprising to about $17.5 billion.

Emirates NBD Egypt told customers last week that it would suspend use of Egyptian credit and debit cards abroad entirely, but later rowed back on the decision and said it would set new limits instead.

Three-year IMF loan sought

The Egyptian government says it’s finalizing talks with the International Monetary Fund on a three-year loan program and is asking for $7 billion a year to finance its economic program.

A Cabinet statement says Prime Minister Sherif Ismail discussed the talks with the IMF in a meeting with the head of Egypt’s Central Bank and several other ministers.

It says the government is nearing its “final stages” in the talks with the IMF.

Egypt’s state news agency MENA said on Wednesday that an IMF delegation is due to arrive in Cairo within days to continue the talks.

The loan is expected to help shore up Egypt’s struggling economy amid declining tourism revenues and falling local currency.

(With Reuters and The Associated Press)

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Last Update: Wednesday, 20 May 2020 KSA 09:52 - GMT 06:52
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