Egypt slaps new controls on traveling with cash

Updated 25 December 2012
0

Egypt slaps new controls on traveling with cash

CAIRO: Egypt has banned travelers from carrying more than $10,000 in foreign currency in or out of the country, as officials worry over pressure on its pound currency and a rush by Egyptians to withdraw their savings from banks.
Political turmoil over the past month has raised fears among ordinary citizens and investors that the government - which has pushed back talks to seal IMF funding till January - may not be able to get its fragile finances under control.
The central bank has spent more than $ 20 billion of its foreign reserves to support the pound since the popular uprising that toppled Hosni Mubarak in early 2011. It now has only $ 15 billion, equal to only about three months of imports cover.
The uprising drove away tourists and foreign investors alike, freezing growth, pushing the state budget deficit into double digits as a percentage of national output and worsening its balance of payments.
On Monday, Standard & Poors' cut Egypt's long-term credit rating and said another downgrade was possible if deepening political turbulence undermined efforts to prop up the economy and public finances.
Presidential spokesman Yasser Ali yesterday confirmed the new government currency restriction, which includes US dollars or their equivalent in other foreign currencies. The decision also forbids sending cash through the mail.
The decision prohibits all travelers from "bringing foreign currency into the country or carrying it out to only $10,000".
Any funds over $ 10,000 must be transferred electronically, Ali added.
Previously, travelers were simply required to declare any amounts above $ 10,000 to authorities on their way in or out.
The central bank has already limited Egyptians from transferring more than a cumulative $100,000 out of the country since the uprising nearly two years ago unless they can demonstrate a pressing need for the funds.
Many wealthier Egyptians have reached their limit and are no longer able to send funds abroad.
The crisis has complicated a $ 4.8 billion loan the government is seeking from the International Monetary Fund.
The IMF had been due to approve the loan on Dec. 19, but the government asked for a delay after it cancelled a series of unpopular austerity measures deemed essential for its approval.
Bankers said depositors had been withdrawing greater amounts of cash from their accounts since President Muhammad Mursi issued a constitutional declaration last month that expanded his powers and threw the country into political crisis.
The constitutional declaration has led to occasional street battles between supporters and opponents of Mursi.
"Since the clashes on Nov. 28 and after the announcement that the IMF loan was delayed for a month some dollarization started to take place, mainly through cash transactions," said an official at the treasury of a Cairo-based bank.
Depositors have also been spooked by an unexpected weakening of the Egyptian pound, which the central bank has allowed to fall by about 1 percent over the last month, he added.
Seeking to quell what it called these "public rumors", the central bank on Monday said it was taking all steps needed to safeguard deposits in Egyptian banks whether denominated in local or foreign currencies.
Ayman Osama, father of two young children, said he withdrew the equivalent of $ 16,000 from his account this week and planned to withdraw more in the coming days.
"I have been hearing that the central bank is going to take over all our bank deposits to pay wages for government employees given the current deteriorating economic situation," he said. "I am not going to put any more money in the bank and neither will many of the people I know."
One Egyptian who wanted to buy $ 10,000 last week said he had to go to many currency exchange shops before he could find sufficient dollars because most shops had run out.
Bankers said the rush had left banks and money changers short of dollars, but that more bank notes had been ordered from abroad.
"We are having a shortage of dollars these last few days. It therefore may be difficult to pull out money. But the shortage should be solved in a week," an official at one Cairo bank told Reuters.
In a note published last week, EFG Hermes economist Mohamed Abu Basha lowered his forecast for the currency to 6.60 pounds to the US dollar by the end of 2013 from an earlier forecast of 6.40 pounds.
"An extensive delay in the IMF deal will definitely lead to disorderly devaluation, which is likely to take the USD-EGP up to 7.0 pounds, where dollarization would be the crack to the system," Abu Basha wrote.


Gulf airlines Emirates, Etihad, Qatar Airways seen flying under radar at Farnborough Airshow

Updated 44 min 56 sec ago
0

Gulf airlines Emirates, Etihad, Qatar Airways seen flying under radar at Farnborough Airshow

  • Over 1,500 exhibitors and 100,000 trade visitors are expected to attend this week’s airshow
  • Farnborough and the Paris Airshow — held on alternate years — have accounted for around 30 percent of annual commercial business

LONDON: The aviation industry heads to the UK’s Farnborough International Airshow on Monday in rude health, with higher oil prices and a strong global economy leading to predictions of a large number of orders at the week-long show.
But this time around, significant orders from Gulf carriers such as Etihad, Emirates and Qatar Airways are unlikely to materialize, as the region’s carriers continue to take stock after a period of bruising losses.
Over 1,500 exhibitors and 100,000 trade visitors are expected to attend this week’s airshow, one of the most important events for the global aviation industry.
Farnborough and the Paris Airshow — held on alternate years — have accounted for around 30 percent of annual commercial business for manufacturers like Boeing and Airbus since 2012, according to aviation consultancy IBA Group.
Some $124 billion worth of orders and commitments were placed at the 2016 show, according to organizers.
The aviation industry is in rude health in 2018, with passenger numbers and load factors rising internationally thanks to global economic growth.
Plane makers bagged around 900 firm or provisional orders in Paris last year, the consultancy said. And while the international order backlog is high, a similar number of orders is expected next week on the back of recent rises in the price of oil.
“The trend between oil price and annualized orders has been uncannily strong,” said IBA’s Chief Executive Officer Stuart Hatcher in a report issued July 9.
“This is not surprising given that most orders have been placed for new fuel-efficient technology, but even with such large backlogs in play, orders continue to come in as oil rises.”
This time around however, the big three Gulf carriers — Etihad Airways, Emirates and Qatar Airways — are unlikely to feature too heavily among the big spenders next week, analysts predict.
Etihad Airways made headlines in Farnborough in 2008, when it made $20 billion worth of orders from Boeing and Airbus.
Fast forward 10 years though, and the Abu Dhabi carrier is in consolidation and restructuring mode, its international expansion plan on hold following the insolvency of its European partners Air Berlin and Alitalia.
After posting an annual loss of $1.5 billion for 2017 (albeit an improvement on the previous year), Etihad earlier this month announced a reorganization into seven business units to be accompanied by further job cuts, significantly scaling back its international ambitions.
The main deals the carrier is reportedly working on with manufacturers are attempted price reductions for previously placed orders.
“It’s not the done thing to cancel existing orders at airshows,” said Saj Ahmad, chief analyst at Strategic Aero Research.
Etihad did not respond to a request for comment.
John Strickland, director of JLS Consulting, said the other two big Gulf carriers were also unlikely to splash significant cash at Farnborough.
“It’s probable that any statements by Emirates and Qatar Airways will be more modest,” he told Arab News.
Dubai’s Emirates has fared better than its Abu Dhabi counterpart, reporting a $1.1 billion profit for the year ending March 2018.
Despite the airline’s continuing recovery, recent headline orders from both Boeing and Airbus are tempering the expectations for what will be announced at Farnborough.
“Emirates has placed recent orders for Boeing 787s and more Airbus A380s so large headline orders are unlikely,” said Strickland.
Emirates declined to comment.
Qatar Airways has been hit hard by the boycott of its home market by the Anti-Terror Quartet — Saudi Arabia, the UAE, Bahrain and Egypt — last year, with the group’s CEO Akbar Al-Baker admitting the airline is likely to report a large loss for the past year.
But the company has been in acquisition mode, acquiring a 9.6 percent stake in Cathay Pacific in November for $662 million, and has expanded a number of its routes in recent months.
“Qatar Airways may plump up for more (Boeing) 777Fs as it looks to build its freight capacity in the wake of the (boycott) to alleviate import pressures on goods and services,” Ahmad told Arab News.
IBA forecasts that aircraft leasing firms may dominate Farnborough orders, accounting for between 30 and 50 percent of orders.
Ahmad told Arab News that Dubai-based DAE Capital may be one of the firms preparing to place large orders, with rumors of 100 jets apiece for Airbus and Boeing.
DAE, Airbus and Boeing did not respond to requests for comment.