Repatriation of Profits and Capital:
Law 88 of 2003 (the Unified Banking Law) now regulates the repatriation of profits and capital, super ceding law 38 of 1994.
Foreign Exchange Regime:
Since late January 2003, Egypt's stated policy has been a free-floating foreign exchange rate regime, with all banks free to set their own rates. The Central Bank posts an average rate at the end of each day based on reported transactions, which serves as a market guideline. From the introduction of the new regime through July 2003, the pound had officially depreciated around 25%, from LE 4.62/$1 to around LE 6.15/$1. It remained in the LE 6.15-6.20/$ range until late December 2004 when it appreciated suddenly to the LE 5.79-5.83/$ range. Many expected that the Government’s decision to float the pound would ease the problems of gaining access to foreign exchange, but foreign-exchange liquidity and turnover remained problems until late 2004, when the government took measures to improve liquidity. The illegal parallel market that reappeared in 2001 to meet the substantial gap between supply and demand at the official rate was virtually eliminated with these measures.
Egypt largely eliminated its official foreign-exchange transfer restrictions in 1991. Egyptian law allows individuals and businesses to conduct all normal foreign-exchange transactions, including establishing foreign exchange accounts and transferring foreign exchange in and out of Egypt. Authorized banks may provide the full range of foreign-exchange transactions, including accepting deposits, executing transfers, and opening letters of credit. Foreign currency is to be made available at banks and foreign-exchange bureaus.
Foreign Currency Surrender Requirement:
The surrender requirement issued in Prime Ministerial decree 506 of 2003 was annulled by the Administrative Court of the State Council and later by a Prime Ministerial Decree in December 2004. Ministries, authorities, companies, and individuals that engage in foreign-exchange-generating activities had been required to sell 75 percent of their foreign-exchange revenues to banks within one week of their receipt. Firms were allowed to keep 25 percent in private accounts to meet their foreign exchange obligations. Firms whose foreign currency obligations exceed 25 percent of their foreign exchange earnings were allowed to exceed this limit, as long as they provide proper documentation to authorities
The Government has repeatedly emphasized its commitment to maintain the profit repatriation system to encourage foreign investors to invest in Egypt. The current system for profit repatriation by foreign firms, announced in late June 2002, requires sub-custodian banks to open foreign and local currency accounts for foreign investors (global custodians), which are exclusively maintained for stock exchange transactions. The two accounts serve as a channel through which foreign investors process their sales, purchases, dividend collections, and profit repatriation transactions using the bank’s posted daily exchange rates. The new system is designed to decrease the settlement period for transactions to less than two days.
The new inter-bank foreign exchange market, operationalized in late 2004, permits forward trading.
Investment Treaty:
The Investment Treaty provides for free transfer of dividends, royalties, compensation for expropriation, payments arising out of an investment dispute, contract payments, and proceeds from sales. Transfers are to be made in a "freely convertible currency at the prevailing market rate of exchange on the date of transfer with respect to spot transactions in the currency to be transferred".
Worker Remittances:
Law 8 of 1997 stipulates that non-Egyptian employees hired by projects established under Law 8 are entitled to transfer their earnings abroad.
Royalty Payments:
Conversion and transfer of royalty payments are permitted when a patent, trademark, or other licensing agreement has been approved under Law 8 of 1997.
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