By Jon Matonis
Thursday, December 27, 2012
On Tuesday, Presidential spokesperson Yasser Ali confirmed
the government's decision which limits all travelers from "bringing
foreign currency into the country or carrying it out to only $10,000."
Ali added that "any funds over US$10,000 must be transferred
electronically" and the decision also forbids sending cash through the
Previously under the original law, any amounts above $10,000
or their equivalent in foreign currencies simply had to be declared to
With foreign investors and tourists holding back now,
the post-revolutionary Egyptian government of Mohamed Morsi is finding
it difficult to maintain control over its finances and budget deficit.
As a result, Egyptian officials have delayed the high-level talks that
are necessary to secure a $4.8 billion loan from the International Monetary Fund (IMF).
New thinking at the International
Monetary Fund now accepts that capital controls are sometimes necessary
to prevent destabilizing capital flows. It is not clear from the IMF
Survey if this new view would apply to the control of outflows from Egypt which has seen its foreign currency reserves fall
from $36 billion in 2010 to $15 billion today dangerously close to the
IMF's recommended coverage of three month's of imports. Estimates put
hard currency reserves at just about $4 billion.
After visiting one exchange office that had run out of dollars, Cairo resident Mahmoud Kamel said, "I want to exchange money because I'm afraid the Egyptian pound will not have any value soon."
due to the cumulative limit of $100,000 in effect from nearly two years
ago, many wealthier Egyptians have maxed out and are unable to send
The Central Bank of Egypt
said Tuesday that the Egyptian pound was trading at 6.20 per U.S.
dollar compared to 6.00 during the first half of the year. Without
necessary currency reserves to fund imports, it is likely that the pound
will fall in value sharply.