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Thursday, 8 December 2016

Foreign companies in Egypt refuse profit repatriation “haircut”

Regardless of where the exchange rate will stabilize, foreign companies and international airlines are reportedly refusing to repatriate profits from Egypt at current exchange rates, Al Mal says. They are complaining that the profits, held in Egypt as they were not able to repatriate them, were worth nearly twice as much in USD-terms prior to the EGP float, meaning that they would get around a 50% haircut upon repatriation. International operators are demanding repatriating their profits using the pre-flotation FX rate. Good luck with that, ladies and gents — we wouldn’t hold our collective breath, if we were you.

Next up to face this problem are the local mobile network operators, Al Mal notes. A source tells the paper Orange Egypt and Etisalat Misr are due to repatriate profits to their parent companies by the end of March, whereas Vodafone Egypt makes the transfer at June’s end. The source, who is simply identified as being from “a telecommunications company,” says the MNOs are waiting for the FX rate to drop to EGP 11 per USD 1, something they reportedly expect in 1H2017.

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