CAIRO: Central Bank of Egypt (CBE) Governor Hisham Ramez vowed Wednesday to tackle the black market, in the Egyptian Pound which plunged this week due to a soaring demand for the U.S. dollar amid fears over the repayment of a $2.5 billion deposit to Qatar, according to MENA.
“We will take technical measures in the coming period to control the currency black market,” Ramez told reporters at a banking conference held in Lebanon, but he did not disclose any details about these measures.
The local currency weakened against the dollar in the black market over this week, recording around 7.60 to 7.75 EGP per dollar, compared to an average of 7.4 EGP in the black market, while the official rate at banks was steady at an average of 7.15 per dollar, a local trader told The Cairo Post.
“Egypt will repay a $2.5 billion deposit to Doha Nov.28,” said Ramez, reiterating Egypt’s commitment to the timely repayment of the cash.
Ramez added that Egypt paid $500 million back to Qatar earlier in October and the outstanding $500 million installment is scheduled to be repaid later in the first half of 2015, according to MENA.
During Morsi’s year-long rule the Egyptian government borrowed over $7 billion from Qatar. Since his ouster, Egypt has been paying back the debt. However, economists see that this will likely hit Egypt’s foreign reserves as Egypt has not received cash aid for Gulf States to compensate the shortfall, but for a $1 billion grant from Kuwait earlier this month.
The foreign reserves allow the government to purchase basic commodities, such as wheat and petroleum products, and to pay off premiums and interest on foreign debts. Egypt’s net foreign reserves have shrunk to less than 50 percent of their level before the January 2011 Revolution.
Over the past four years, the country’s economy has been hit by political unrest which hurt foreign reserve revenues from tourism and foreign direct investments.