To raise scarce dollars, Egypt looks to pension plans, draft evaders

Egypt is offering a minimum $5,000 fee for Egyptians living abroad who wish to clear their military service obligations and a US dollar pension plan also aimed at its citizens abroad, in a series of fresh measures designed to boost foreign currency inflows.

Over the past few months, state-owned banks have begun selling high-interest dollar-denominated bonds, and from May, a new law has granted temporary residence to foreigners who buy property for at least $50,000 or deposit $50,000 in state-owned banks.

Those initiatives follow a 2022 scheme to give Egyptian expatriates tax rebates for paying fees on car imports in hard currency, and other measures to attract foreign currency investments in land and industry.

Egypt has been drawing down its foreign currency assets for the last two years after a foreign borrowing spree, following the twin shocks of the coronavirus pandemic and the Ukraine crisis. Remittances, by far Egypt's biggest source of foreign currency inflows, dropped sharply in January to March, compared to the same period in 2022, central bank data shows.

The pension plan lets Egyptians living abroad set up pension funds for a minimum $500 that would guarantee monthly payments in dollars for 10 to 15 years from the age of 50, according to a statement on Monday from the Financial Regulatory Authority.

The government will also raise foreign currency by allowing Egyptians living abroad, who are delinquent in their military service, to make good on their status permanently by paying either $5,000 or 5,000 euros during a one-month window, which started on Monday.

The foreign ministry on Tuesday announced a WhatsApp number and email address for enquiries about the scheme, which it said would be monitored around the clock, and urged applicants to register quickly.

Most Egyptian men between the ages of 19 and 30 are required to serve in the military. Many received temporary exemptions to travel for education, medical treatment or work, but end up remaining abroad. Those who do not comply with the service requirement would not be able to renew their passports.

The government has asked applicants to pay into a specially created account at the Abu Dhabi branch, in the United Arab Emirates, of Egypt's state-owned Banque Misr, which itself is headquartered in Egypt's capital Cairo.

The proposed military amnesty will also be available to men over 30 who fail to complete their service.

In the past, the government has allowed military service exemptions with payment of 3,000 Egyptian pounds ($97), provided the men return to Egypt and appear before a military panel to plead their case, said Mahmoud Salem, an Egyptian analyst living in Berlin. But the pound's value has diminished sharply in recent years.

In 2018, 8.9 million Egyptians lived abroad and 97.1 million in Egypt, according to the most recent figures from the central bank. Since then, the number of Egyptians living in Egypt has risen to 105 million.

Official data shows external debt rose to $165.4 billion by the end of March from under $40 billion in 2015. At least $50 billion in repayments will be due over the next few years, according to the central bank.

(Reuters)