The Central Bank of Egypt (CBE) has signed a US$500 million trade finance facility agreement with the African Export-Import Bank (Afreximbank) that should help restore the ability of Egyptian banks and businesses to transact on letter of credit (L/C) terms.

Foreign exchange, and consequently L/Cs, have been in very short supply recently, even for priority imports such as pharmaceuticals (DC World News, 3 February 2016).

Speedy implementation

Cairo-based Afreximbank said it would implement the multi-million dollar trade finance facility as soon as possible.

The new agreement is part of a US$3.5 billion Afreximbank financing programme enabling the bank's member-countries to adjust to current adverse economic shocks, especially commodity price- and terrorism-induced ones (DC World News, 29 December 2015).

Egyptian actions

In November 2015, Afreximbank said it would make a facility of up to US$1 billion available to Egypt to boost foreign currency liquidity through either trade finance lines of credit to some commercial banks or through funding the CBE with US dollars in exchange for an equivalent amount of the Egyptian currency (DC World News, 14 December 2015).

The CBE has published a report stating it had injected US$14 billion dollars into local banks over the last quarter to facilitate imports and curb inflation on essential goods.

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