26 Februari 2016

[260216.EN.AIR] Dollar-starved Air France-KLM Wants Its US$13 Billion Egypt Has Seized

AIR FRANCE-KLM has urged Egypt to release EGP100 million (US$13 million), the lack of which makes it increasingly hard to operate in the country, reports Jordan's Al-Bawaba Business.

Air France-KLM country manager Cees Ursem said the airline had been unable to transfer earnings out of the country since October and had asked the tourism minister and central bank governor to help resolve the delays.

"All the foreign carriers they have the same problem," Mr Ursem told Reuters, adding companies are unable to repatriate funds out of the country due to an acute dollar shortage.

"All our revenues are blocked at the bank, but at the same time we have costs like leasing, fuel, staff, ground handling etc, which have to be paid in dollars."

Trade-dependent Egypt has been facing an acute dollar shortage since a 2011 uprising and subsequent political turmoil, which drove away foreign investors and tourists, key sources of foreign currency. Foreign exchange reserves have more than halved to $16.4 billion.

The crash of a Russian airliner over Egypt's Sinai in late October, killing all 224 people aboard, has further impacted tourism in the Red Sea area, and with it Egypt's dollar earnings.

The Egyptian pound has come under downward pressure as reserves have tumbled, but the central bank is reluctant to devalue for fear of greater deflation.

Source : HKSG.

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