The Central Bank of Egypt (CBE) decided to cover 25% of the temporary credit facilities granted by banks to their importing clients in foreign currencies, according to a prominent banker who spoke to Daily News Egypt Tuesday evening.
The source said the CBE will give banks the necessary liquidity to cover 25% of their temporary credit facilities granted to importers in foreign currencies on Wednesday morning, on condition that the banks return this liquidity as a deposit with the CBE at an interest rate linked to the London Interbank Offered Rate (LIBOR).
According to the source, the CBE seeks to ease the burden of importers as much as possible and help them to resume their activity. It also seeks to help them pay their debts and ease the demand on the dollar, both in the official and parallel markets.
The CBE requested from banks on Tuesday morning to list all temporary credit facilities granted to their importer clients in foreign currencies, with deposits in local currency as a guarantee. It allowed banks in January 2013 to grant their importer customers temporary facilities in foreign currency, until they manage to arrange foreign currency.
The CBE’s rules stipulate that bank clients who receive these facilities must arrange the foreign currency needed to cover these facilities until they are re-financed.