Egyptian Overseas Cash Withdrawals Banned by Some Banks Amid FX Crunch
(Bloomberg) -- A number of Egyptian banks have imposed new limits on international credit card transactions as the North African nation wrestles with its worst foreign currency crunch in decades.
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Commercial International Bank — Egypt’s largest listed lender — Abu Dhabi Islamic Bank and First Abu Dhabi Bank Misr reduced daily and monthly limits to as little as $50, according to statements on their websites earlier this month.
The moves are the latest stark sign of Egypt’s almost two-year-long economic crisis, as authorities struggle to implement an ambitious International Monetary Fund-backed reform program that’s set to include the sale of dozens of state assets and a more flexible currency. Most economists expect another devaluation of Egypt’s pound — the fourth since early 2022 — in the first quarter of this year.
Cairo-based EG Bank and Al Baraka Bank rejected earlier reports suggesting they recently introduced a ban on cash withdrawals using credit cards abroad, saying limits on those transactions remained unchanged.
EG Bank said in an emailed statement that “international cash withdrawal transactions from EGBANK credit cards are active for customers when traveling abroad.”
Read More: The Egyptian Pound in 2024: Currency Adjustment Is Inevitable
The IMF, which has yet to complete its first review of a $3 billion deal negotiated in late 2022, said Jan. 11 that discussions with Egypt would continue in the “coming weeks.” A significant increase in the loan is on the table, as the Middle East’s most populous nation faces economic fallout from the Israel-Hamas war next door while attacks on Red Sea shipping by Yemeni militants cause a steep decline in traffic through the Suez Canal.
Read More: Cash-Strapped Egypt Eyes Expanded IMF Loan Now Election Is Over
The Egyptian pound has officially held steady at about 30.9 per dollar for much of the past year, but trades at as weak as 56 on the local black market. Another devaluation, however, risks further stoking inflation that is finally starting to slow after hitting a record high of 38% last year.
(Corrects information in fourth and fifth paragraphs on EG Bank and Al Baraka Bank to show their restrictions remain unchanged. Corrects headline to show overseas withdrawals were restricted, not banned.)
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