CBE sees import rules saving USD20 billion in 2016Central Bank of Egypt (CBE) Governor Tarek Amer said rules to curb what he described as unnecessary imports may save about USD20 billion this year, helping to ease the foreign-exchange squeeze. “The largest demand for foreign exchange comes from imports, so these measures are a quick fix to improve the balance of payments," Amer said in an interview with Bloomberg. “Egypt has been flooded with cheap, low-quality goods and we are trying to regulate this market.” “In a matter of a few months, we have succeeded in restoring confidence in the domestic market," said Amer. He didn’t disclose how he managed to pay investors back without affecting reserves. Amer said that the push to coordinate economic policy with the government was an indication to Egypt’s determination to enact reforms. The main avenue for the coordination is a council that includes Amer, top Cabinet ministers, as well as outside experts such as Mohamed El-Erian, former chief executive officer of Pacific Investment Management Co. The panel has met twice in the past month. “We are, for the first time, setting a comprehensive economic vision for Egypt through the coordination council," Amer said.   Our comment: We reiterate our view that the government’s attempts to curtail imports is realistic, in light of a sticky import bill in the face of declining inflows from nearly all source of foreign exchange income. In that respect, achieving some stability for the balance of payments can be hardly attained with some rationalisation of imports. Moreover, we do not see these measures replacing the need for an EGP devaluation, but rather hinting that it might not be as imminent as some market participants expected. The USD20 billion mentioned by the Governor, however, dwarf our expectation of savings in the neighbourhood of USD2.5 billion. The USD20 billion represents c40% of the non-oil import bill in FY2014/15; hence, it is not clear what the Governor meant by the number. Egypt’s non-oil import bill comprises mostly raw materials and intermediate/investment goods, with consumer goods representing only 23% on average in the last five years (USD14.4 billion in nominal terms in FY2014/15). (Bloomberg, Mohamed Abu Basha)