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Egypt lifts import curbs, backs bigger private sector role

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Egyptian central bank dropped a requirement for importers to use letters of credit

Egypt has lifted a key restriction on imports and approved a list of economic activities the government would leave to the private sector, in an effort to meet two key conditions attached to the International Monetary Fund’s (IMF) $3 billion support package.

In a statement, the central bank said it dropped a requirement for importers to use letters of credit and the government will now allow direct payment.

The condition, introduced in February to ease a dollar crunch that was exacerbated by the Ukraine conflict, has drawn complaints from businesses and caused shortages of a variety of imported goods.

Despite the curbs and two major devaluations this year, Egypt still faces a foreign currency shortage and earlier in December secured the 46-month financial support from the IMF, for which the reversal of the import curbs was a key requirement.

The agreement also called for the government to list economic activities that the state would withdraw from.

Earlier on Thursday, the cabinet said that President Abdel Fattah Al-Sisi approved a list of 62 economic activities the state would leave to the private sector, giving it a greater role in helping to grow the economy, create jobs and increase investment and exports.

The government statement did not specify those activities, but in May Egypt outlined an array of state assets that would be offered to private investors, including in sectors such as electric vehicles, data centres, and oil and gas networks.