Official sources informed Amwal Al Ghad that Central Bank of Egypt (CBE) – on behalf of Ministry of Finance – decided to start marketing dollar certificates of deposit next Tuesday for Egyptians living in some Arab countries including Kuwait, Saudi Arabia, United Arab Emirates, Qatar and Tunisia.
CBE held a meeting yesterday with National Bank of Egypt (NBE), Banque Misr, Arab Banking Corporation, National Bank of Abu Dhabi, Arab Bank, National Bank of Kuwait and Ahli United Bank which were chosen to market these certificates as they have strong presence in gulf countries, sources added.
Saudi Arabia’s monetary authorities approved last week launching these certificates for Egyptians living in the country. The dollar certificates were destined to be launched last March, but monetary authorities in Saudi Arabia delayed approving the certificates because of its high 4% interest rate, assuming that the higher demand will go for Egyptian certificates leading depositors to withdraw their money from local banks in those countries.
Abu Dhabi’s government contributed in the studies done over issuance of the dollar certificates of deposit in Arab countries at the end of 2011 covering the required standards of the certificates and suggestions on return rates and terms.
Central Bank of Egypt and Ministry of Finance agreed on the conditions on issuance and circulation of certificates with a value of US$ 1000 / certificate, without a maximum sale limit. In addition, the 3-year certificate, which gives 4% annual return, can be redeemed anytime upon customer’s demand.
The marketing campaign of these certificates is assigned to Tarek Nour Agency which already began to shot a number of TV advertisements stressing on Egyptians’ national duty to support the country’s economy. These advertisements will be broadcasted on channels in Arab countries where Egyptians are living.
Sources added that this move has been faced with a wave of rejections by some Islamic political parties who demanded to issue Islamic Sharia-compliant sukuk instead. However, government neglected their demands as there is no law in Egypt regulating this type of instruments. Launching these certificates shows that Egypt is mainly targeting fill the gap in its foreign liquidity financing shortage on sharp decrease of dollar resources especially after International Monetary Fund and other Arab and international financial institutions rejected loaning Egypt due to the current instability witnessed by all economic sectors and the absence of a clear reform plan. Accordingly, Egypt’s foreign reserves are sharply retreating as they dropped by US$ 21.5 billion since last year’s revolt.