The Central Bank of Egypt (CBE) is unable to provide the monthly requirement of $700m to import petroleum materials and natural gas, and to pay the installments for facilitations obtained by Egypt and loans from foreign banks.
According to a prominent official at the Egyptian General Petroleum Corporation (EGPC), in statements to Daily News Egypt, the CBE provided $160m in October 2015 to import petroleum materials, which added extra burdens on the EGPC to provide the remaining dollar requirements to meet the market’s needs.
He further explained that the EGPC requested $700m per month from the CBE, in the second quarter (Q2) of the current fiscal year (FY) 2015/2016, to import petroleum materials and natural gas.
The official added that the CBE informed the EGPC that it is unable to provide all the monthly dollar requirements, so as not to affect the foreign currency reserves and Egypt’s credit ranking.
The CBE announced that the volume of Egypt’s foreign currency reserves had increased by $80bn to reach $16.414bn by the end of October 2015, compared to $16.33bn by the end of September 2015.
The EGPC had requested $2.4bn during Q1 of 2015/2016 from the CBE, in $800m per month installments. The CBE provided approximately $1.8bn, while the EGPC provided, from its own budget, the rest of the dollar requirements to import liquefied natural gas (LNG) and gasoline.
Furthermore, the official said the fuel import bill amounts to approximately $650m per month, compared to $800m recorded last year. This decrease was due to the fall in crude oil price, which led to a decline in the value of imported petroleum derivatives.
The official added that around $240m is paid monthly to import LNG shipments, to rent gasification ships, and to pay off installments for facilitations acquired from Saudi Arabia and the UAE in fuel shipments and dollar loans.
He also noted that the decline in the subsidy bill is due to the fall in Brent crude oil, while the depreciation of Egyptian pound against the US dollar will reduce the surplus in subsidy allocations.