Regulatory Alerts2020-06-17
A circular dated June 16, 2020 regarding the initiative to finance the payment of salaries and wages for workers in the tourism sector, guaranteed by the Ministry of Finance.
In the letter addressed to the Egyptian Financial Supervisory Authority (EFSA), the National Bank of Egypt clarified that it does not impose any restrictions on the movement of liquidity or foreign currency in and out of the country, according to what was published in its annual financial statements. The bank also stated that the foreign assets and the liquidity it holds are fully available to meet its commitments, stressing that it is committed to maintaining its international reserves at a level consistent with the recommendations of the International Monetary Fund (IMF). In addition, the National Bank of Egypt stated that it will continue to disclose information on the details of foreign exchange reserves, including the names of beneficiaries, amounts paid to them and payment dates, as well as details of the beneficiaries and the amount of the discount. Moreover, the bank clarified its commitment to continue disclosing the financial statements of Egypt Mortgage Finance Company (EMFC) on a monthly basis, including additional information that EMFC requires through a single bank. The letter also emphasized the importance of transparency in financial dealings and stressed that all activities of the Central Bank are carried out within the framework of Egyptian law, and any discrepancies or irregularities will be subject to legal action. The letter also addressed the issue of the 5th point in the annual report published on January 3, 2018, which pertained to a method of calculating the required minimum capital ratio, where a zero-risk weight is assigned to fully guaranteed deposits by the Central Bank of Egypt. The letter also clarified that for the purpose of determining the required minimum capital ratio, a zero-risk weight is applied to fully guaranteed deposits made by the Central Bank of Egypt. Furthermore, the letter referred to the 5th point in the annual report published on January 3, 2018, regarding the assessment of the bank's capital adequacy ratio and the establishment of provisions as per the approval of the Central Bank of Egypt's board of directors on May 24, 2005. The letter emphasized that the provisions established by EMFC should be deducted from the guaranteed deposit funds allocated to customers. This is in accordance with the aforementioned terms. Finally, the bank requested that its stakeholders take note of these measures as of their respective dates and reminded them that it will use the available liquidity within the framework of the established plan starting from March 20, 2020. The letter concluded by expressing the bank's commitment to maintaining transparency in its financial dealings and stressed that any restrictions or limitations imposed by it will be done according to applicable laws.