Restrictions by Egypt’s central bank raise fear of Lebanon-like crisis

News Bulletin Reports
2022-12-29 | 12:56
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Restrictions by Egypt’s central bank raise fear of Lebanon-like crisis
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Restrictions by Egypt’s central bank raise fear of Lebanon-like crisis

By God, I am not a beggar. I am an Egyptian with a withdrawal limit of $100 a month on my card. I just need to pay the bus fare to get to the airport to leave.”

 

With this tweet, an Egyptian summed up the situation he reached after major Egyptian banks reduced the limits for withdrawals and purchases via electronic payment cards outside the country.

 

The decision came after the Central Bank's statement, in which it indicated that bank customers should be notified that it is forbidden to misuse credit cards.

 

This happened after the use of cards in the middle of last week amounted to more than 55 million dollars in one day, an increase estimated at more than five times over the daily average in the previous quarter of last year.

 

But why did the Central Bank of Egypt resort to this measure?

 

Observers believe that the decision was taken to limit the bleeding of the dollar outside the country and to put an end to speculation with it by using credit cards abroad to buy the dollar according to what is known as the bank rate and then sell it in the country according to the parallel market price.

 

The Central Bank seeks to reduce the large gap between the official dollar rate in banks and the parallel market, which negatively affects Egypt's financial situation, which is suffering from an economic crisis.

 

The financial and economic crisis that Egypt is witnessing is similar to what is happening in Lebanon, although Egypt is seeking to control its escape through official procedures.

 

In Lebanon, limitations have been applied to bank withdrawals for three years in a discretionary manner.

 

While the Capital Control Law, which regulates the process, was not approved in the Lebanese Parliament and is still under discussion in the joint parliamentary committees.

 

As for withdrawals and purchases via electronic payment cards outside the country, they have been stopped, but they are still used only in some stores and restaurants in Lebanon. Still, they are limited to the Lebanese currency. Lebanese citizens can only use the so-called fresh dollar accounts opened after 2019 for transactions abroad or in USD.

 

So, Egypt may succeed in curtailing the economic crisis it is going through, as it is a centralized country that obliges its institutions with the strategies it sets.

 

As for Lebanon, every crisis is lost in the corridors of political rivalries, and with it, solutions are lost, and the state crumbles.

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