Egypt launches high-interest CDs to lure dollars from overseas workers

In a bid to encourage Egyptians working abroad to help ease a hard-currency shortage by putting their dollars in local banks, Egypt’s state banks will introduce dollar-denominated savings certificates yielding up to 5.5 percent interest.

At a Monday press conference, Immigration and Egyptian Expatriate Affairs Minister Nabila Makram, Central Bank of Egypt (CBE) Deputy Governor Lobna Helal and the heads of three public-sector banks announced the launch of Biladi dollar certificates for expatriate Egyptians. The savings vehicles will be available through three national banks — the National Bank of Egypt, Banque du Caire and Banque Misr — and will allow Egyptian foreign workers to keep their savings in dollars while still depositing them into the local banking system.

Officials emphasized the “special” level of returns while also calling on “the masses of Egyptians working abroad to express their patriotism and their desire to support the national economy.”

Egyptians citizens overseas can open certificates with a minimum value of US$100 in their own names or the names of their minor children. Deposits made through the program will earn fixed annual interest rates of 3.5 percent for a one-year certificate, 4.5 percent for a three-year certificate and 5.5 percent for a five-year certificate, with interest disbursed every six months.

The accounts will offer both a higher interest rate and a lower minimum deposit than competing products.

Commercial International Bank (CID), the country's largest private-sector bank, offers dollar-denominated CDs with fixed interest rates of up to 4 percent for three years or 4.35 percent for five years, and requires a minimum deposit of US$1,000.

The highest yielding one-year CD available in the United States currently has an annual interest rate of 1.32 percent and requires a minimum deposit of US$5,000, according to banking website bankrate.com. Yields for 5-year CDs top out at 2.25 percent, with a US$1,000 minimum deposit.

Another key advantage of the Biladi certificates is a guarantee from the Central Bank that once the certificates have matured, customers will be able to transfer their deposits and interest back out of the country in dollars without a maximum limit.

Faced with a severe shortage of foreign currency, the government has been eyeing the dollars earned by Egyptians abroad as an attractive source of hard currency for local banks.

CBE figures show that worker remittances amounted to around US$19 billion in fiscal year 2014/15 — more than the combined total revenue from tourism, the Suez Canal and grants from foreign governments.

According to former CBE Governor Hesham Ramez, as of 2015 only around 10 percent of those remittances were deposited in local banks, down from around 75 percent in 2010. While the government holds the pound at an artificially low exchange rate of LE7.73 to the dollar, most workers prefer to keep their savings in dollars or to exchange them for better rates on the black market.