Tarek Amer, Governor of the Central Bank of Egypt (CBE), said that Egypt is set to pay $1.5bn as part of the foreign oil companies' arrears. Dues owed to foreign oil companies operating in Egypt have gradually been falling from $3.6bn in September to $3.5bn in December 2016. Amer said in a television interview on Friday that banks have already begun to repatriate dividends. He pointed out that Egypt is due to receive $2bn from the World Bank in March, which is the second tranche of a $3bn loan to support the government's economic reform programme. Egypt started to implement an economic reform programme, which included the liberalisation of the exchange rate, restructuring fuel subsidies, and the application of the value-added tax, in addition to signing a loan agreement with the International Monetary Fund (IMF). The CBE had floated the pound in November 2016 to attract foreign investments, which prompted the IMF to greenlight the $12bn loan agreement. Prime Minister Sherif Ismail said earlier this month that Egypt is working on a serious mechanism to cut the rest of the entitlements of foreign oil companies. Asked about the impact of the flotation, Amer said that banks gathered $13.5bn since the flotation, most of which was from Egyptians. Egypt's core inflation rate jumped to its highest level in more than ten years at 30.86% in January 2017. The flotation led to a depreciation in the value of the Egyptian currency, falling from EGP 8.8 per dollar to EGP 20 in December, before gaining ground recently, jumping back up to EGP 15.85. Amer stressed that the flotation will not have any further impact on inflation. He noted that foreign currency in the banking sector increased tenfold since the flotation, adding that the value of imports since November amounted to $15bn, while he expected them to decrease by 20% this year. He said that Egypt has provided $71bn to different economic sectors since November. Amer predicted the external debt to reach 30% of GDP in June—equivalent to approximately $60bn—and stressed that the debt-to-GDP ratio is now safe and that the budget is now under control. As for the big hikes in prices following the flotation, Amer said that the negative impacts of the flotation were "better than I expected." "We made a change in the structure of growth—decreasing consumption growth to 40%—and raised investment growth to much higher ground," he said. Amer pointed out that Egypt's imports of fuel are estimated at $1bn per month, while remittances from Egyptians abroad now reached $19-20bn—up from $9bn in January 2011. He refuted rumours that the CBE had intervened in the exchange rate, saying "there are no instructions from the CBE to banks in terms of the exchange rate, but we called upon them to not discriminate." He stressed that, by the end of 2017, citizens will be able to freely buy dollars at banks.
