Egypt injects $14 billion into banks to ease dollar shortage

Egypt’s central bank has injected over $14 billion dollars into local banks over the past three months to facilitate import activity and curb inflation on essential goods.

“The central bank and Egyptian banks have embarked on an urgent plan to facilitate foreign trade in order to provide for production and for essential consumer goods for Egyptian citizens,” a central bank report said and added “to this end the central bank has provided more than $14 billion over three months and this has had an immediate impact on foreign trade and industrial activity.”

Egypt has been facing an acute dollar shortage that has hampered import activity and sapped industrial production ever since a 2011 uprising drove away foreign investors and tourists, key sources of dollars.

The government has in recent months applied various measures, from import restrictions to higher tariffs, to conserve scarce dollars while the central bank has injected foreign currency into the banking system to free up essential imports.

The dollar injections have helped push down prices on essential food items by 25 to 35 percent, the statement added.

Egypt’s annual urban consumer inflation fell to 10.1 percent in January from 11.1 percent the previous month, the statistics agency CAMPAS said earlier in the week.

The central bank report said the dollar injections did not affect its level of foreign reserves, which have remained steady around $16 billion dollars in recent months, or roughly enough for three months of imports.