Egypt bans use of debit cards abroad on hard currency shortage

Egypt has ordered banks to stop clients from using their Egyptian pound account debit cards abroad, a central bank official announced on Wednesday, a move to combat the country’s acute foreign currency shortage.

“We sent a letter to bank chiefs today to stop the use of debit cards outside the country. As for credit cards it is business as usual and each bank sets their own limit for their clients,” the official told Reuters by telephone.

Egypt depends on imports for everything from food to fuel and has suffered from a deficit of dollars in the formal banking system since a 2011 uprising drove away tourists and foreign investors – crucial sources of hard currency.

Many import businesses now rely on a black market where they can procure hard currency for a higher price. The pound’s rate on the black market has weakened since the central bank devalued the Egyptian currency in March, at which time it was roughly in line with the official rate.

“Please ensure that debit cards, including pre-paid cards, issued in local currency by Egyptian banks are only used within the country,” the letter, viewed by Reuters, said.

Debit cards for accounts in foreign currency can still be used abroad up to a limit of $100,000 as per a 2014 directive, the letter added.

“We have started implementing the central bank’s directive as of today,” one state-owned bank chief told Reuters.

Heads of several other state-owned as well as private banks said they had asked the central bank for a few days to implement the directive, however.

Source: Reuters