Operation Attract FX just expanded: State institutions are inviting Egyptian citizens living abroad to purchase new USD-denominated pension certificates as the government continues to try and attract new hard currency inflows and ease the deepening FX crunch. At a press conference yesterday (watch, runtime: 52:01), executives from Misr Life Ins. and the National Bank of Egypt (NBE) announced the launch of the new certificates under the Maash Bokra (Pension of Tomorrow) pension scheme, which are designed to encourage expats to make additional retirement savings by depositing FX in the banking system. The Financial Regulatory Authority published a statement ( pdf) accompanying the presser.

Paying in: Egyptians abroad aged 18-59 can buy in at a minimum of USD 500 and have the option to make additional payments of between USD 50 and USD 10k once a year. The certificates have a minimum maturity of five years, and customers are able to purchase two with different maturities. There are no fixed payments and the pension will be managed through an online portal. No medical screening is necessary to be eligible.

Getting it back: Customers can draw from the pension — also in USD — starting when they turn 50, 55, 60, or 65. They can take it either in monthly installments over a period of 10 or 15 years, or as a lump sum. The pension is paid out in full to next of kin in the event of death or severe disability.

What’s next: Misr Life Ins. is set to run a roadshow to promote the new saving program to citizens living abroad. The NBE is considering launching a similar USD-denominated product for non-expat Egyptians, NBE Deputy Chairman Yehya Aboul Fotouh said at the presser.

It’s all about FX: The new pension marks the latest move by the government to pull more hard currency into the banking system amid an ongoing shortage that has put pressure on the local currency, caused a resurgent parallel market, and driven inflation to record highs. The FX crunch, which has sent the country’s net foreign assets position tumbling from a EGP 251 bn surplus in mid-2021 to a EGP 837 bn deficit in June, has contributed to all three major rating agencies downgrading the country’s credit rating in recent months, with Moody’s weighing a further downgrade later this year.

State banks are trying to attract USD back into the system: The NBE and fellow state lender Banque Misr last month launched two USD-denominated certificates of deposit at rates of 7% and 9%, open to all Egyptians including expats, as well as EGP loans to expats to be repaid in the currency in which they receive their income. Remittances from Egyptians abroad — a key source of hard currency for the economy — have fallen in recent months, suggesting that incoming FX is making its way to the parallel market — where the EGP is currently trading at around 38 to the greenback — rather than entering the banking system.

The state would love to see expats kick in hard currency: Recent government initiatives to drum up more FX from expats include allowing them to import cars in return for depositing fees in FX, buy land in FX, and settle any outstanding military service for the sum of EUR 5K / USD.

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