The feasibility of granting Egyptian nationality in exchange for dollar deposits

In light of the severe shortage of foreign currency, the Egyptian authorities resorted to many means to solve the problem, beginning with restrictions on imports, obtaining Gulf deposits and a loan from the International Monetary Fund, selling part of the assets of government and private companies, and issuing sovereign financing instruments.

Then it resorted to a number of other means, including exempting expatriates from car import fees in exchange for depositing the value of those fees in dollars for a period of 5 years and recovering them in Egyptian pounds without interest, selling lands and housing units in dollars, granting Egyptian nationality in exchange for buying a property, investment or deposit, and raising the interest rate on Dollar deposits, and accepting deposits in the currencies of Saudi Arabia, the Emirates and Qatar.

With all these methods not succeeding in narrowing the dollar gap, the Egyptian authorities resorted to easing the conditions for expatriates importing cars from abroad, and then recently resorted to easing the conditions for granting citizenship in exchange for buying real estate, entering into investments, or depositing dollar deposits.

The story of granting Egyptian nationality in exchange for dollar deposits began in 2016, which witnessed a shortage of foreign currencies and the spread of black market transactions in dollars. At that time, the head of Parliament’s Economic Committee, Ali Al-Moselhi (currently Minister of Supply), announced in May 2016 a proposal to grant Egyptian nationality to Arabs, especially Iraqis and Syrians. And the Jordanians and the Libyans, in exchange for deposits similar to some European countries, and it is expected that this will bring the state 585 million dollars annually.

The deposit applicant can obtain the Egyptian nationality if he resided in Egypt for a period of 5 consecutive years prior to the application for naturalization, and these conditions apply to some Arabs who are in Egypt as a result of internal problems in their countries, such as Syrians, Iraqis, Yemenis and Libyans.

The State Council has reservations about granting citizenship with deposits

In the following month, Minister of State for Legal Affairs Magdi Al-Agati submitted to Parliament legal amendments that allow foreigners to obtain Egyptian citizenship in exchange for dollar deposits, which was met with objections even from some loyalists to the regime, with the approval of the coming majority of Parliament through the sovereign bodies, and these amendments were referred to the Legislative Department of the House of Representatives. The State for review, has expressed reservations.

The agreement with the International Monetary Fund in November came with what it brought in loans amounting to $12 billion, loans from international and regional institutions and other countries of similar value, the influx of hot money and the issuance of international bonds, which led to the postponement of the issuance of amendments to grant citizenship in exchange for deposits.

However, with the exit of a large amount of hot money from Egypt in 2018, interest returned in the project to grant foreigners nationality in exchange for deposits to obtain an amount of dollars to compensate for the exit of hot money, and indeed Law 173 of 2018 August was issued to add to the types of residence of foreigners in Egypt a new section under the name of foreigners Those with residence with a deposit, and the law stipulates that it is not less than 7 million Egyptian pounds or its equivalent in foreign currencies, to be transferred to the public treasury.

The deposit applicant can obtain the Egyptian nationality if he has resided in Egypt for 5 consecutive years prior to the application for naturalization, and these conditions apply to some Arabs who are in Egypt as a result of internal problems in their countries, such as Syrians, Iraqis, Yemenis and Libyans.

4 options for foreigners to obtain citizenship

The following year, Law 140 of 2019 was passed in July to remove the issue of residency with a deposit, and open the way for foreigners to be granted Egyptian nationality through several methods, including:

• Buying real estate owned by the state or other public legal persons.

• Or by creating an investment project.

• Or by depositing an amount of money in foreign currency that is transferred to the public treasury.

It stipulates the establishment of a unit in the Council of Ministers to receive citizenship applications through these three means, after paying a fee of $10,000, and entrusts the Prime Minister with issuing executive decisions for that.

This is what he did in the last month of the year by specifying the amounts required for each of the four options for obtaining citizenship:

• First: Buying state-owned real estate for at least half a million dollars transferred from abroad.

• The second: Establishing a project or participating in an investment project with no less than 400 thousand dollars transferred from abroad, provided that the percentage of participation in the project is not less than 40% of its capital.

• The third option: for depositing an amount in US dollars and recovering it in Egyptian pounds after a period without interest, provided that it was received by a bank transfer from abroad, either by depositing an amount of 750 thousand dollars, which will be recovered in Egyptian pounds after 5 years without interest, or by depositing one million US dollars for a period of 3 years, after which it will be refunded In Egyptian pounds without interest.

• As for the fourth option, it was to deposit 250,000 US dollars with a bank transfer from abroad, which would be transferred entirely to the public treasury.

In the event that the citizenship applicant disposes of the property he bought 5 years ago, or the investment project in which he contributed is stopped or liquidated, or he disposes of his share in it, he must deposit $250,000 to continue obtaining the Egyptian nationality, or dispose of the property he bought or By contributing to the project to the state free of charge.

 Installment of the value of the property and a non-refundable deposit for one year

It is clear that these options were not very popular except for some Syrians and Iraqis residing in Egypt, who are subjected to security harassment from time to time when renewing their residency, and although the unit specialized in examining applications to acquire citizenship did not announce the numbers of those who obtained it, the Nationality Law No. 26 of 1975 Cases of acquisition of citizenship are required to be published in the Official Gazette, and in light of what has been published in the Official Gazette since then, there are only a few cases of granting citizenship.

That is why the new facilitations announced by the Prime Minister on the second of this month, as he reduced the required value in 3 of the four options, also eased the requirement that the amount come from a bank transfer from abroad only, by allowing the import of that amount also from within, provided that it had He entered the country through one of the customs ports, and the requirement to contribute to an investment project by at least 40% was removed, so that the investment became without any specific percentage.

The most important changes can be explained in the following points:

The amendments also made it possible to pay the value of the property being purchased in installments, as well as by installments of the amount that will be paid to the public treasury without a refund, amounting to a quarter of a million dollars over 12 months, during which the applicant will be granted temporary residence.

The question remains about the success of these facilities for granting citizenship to foreigners in obtaining dollar resources that contribute to bridging part of the current acute shortage, and the answer is based on the fact that the current timing does not contribute to the achievement of these facilities for their goals, in terms of the instability of the exchange rate so far, and the expectations that indicate To a new decrease in the exchange rate of the Egyptian pound against the dollar, and therefore whoever wants to buy an Egyptian property or contribute to an investment in Egypt will wait until the exchange rate stabilizes in order to buy at a lower dollar cost.

The depreciation of the pound squandered foreigners' gains in real estate

The Egyptian banks’ current cessation of financing imports once again will negatively affect the ability of projects to import their needs of raw materials and production requirements, which has recently appeared with feed factories that are currently complaining about the difficulty of releasing components of soybeans and yellow corn from the ports, although the authorities have It gave foodstuffs a priority in procuring the dollar to import its needs.

Added to this is the negative experience of those who bought Egyptian real estate in 2016, although its value in Egyptian pounds has increased now compared to what it was 7 years ago, when that value of the property is converted into dollars - in light of the decrease in the official exchange rate by about 97% in Less than a year - the return achieved for them becomes limited, even less than what they could have obtained if they left the amounts in the form of dollar deposits, which is repeated with the value of their investments in companies as well.

Added to this is the unequal competition on the part of the sovereign authorities that have penetrated into economic activities, the continuous state of stagnation in the markets with the decline in purchasing power, the existence of a black market for the dollar and high inflation rates, and sudden government decisions that confuse the industrial sector, such as decisions to raise energy prices, and the state of the investment climate is unfair. The stable state that prompted many Egyptian businessmen to take their money out of the country and work with loans from banks.

This is in addition to the preferential treatment that foreign nationals find during their dealings with the official authorities, compared to the method of dealing with local investors, and the Egyptian passport allows travel to a smaller number of countries in the world, compared to what passports allow in many other countries that grant their nationality. , in return for investments, buying real estate, or paying non-refundable deposits, in addition to the stability of its investment climate.

Thus, some individuals of Arab nationalities present in Egypt, especially Syrians and Iraqis, can benefit from these new facilities for granting citizenship, but the outcome will not be large and does not fit at all with the volume of dollar needs that have many aspects, from $22 billion to bridge the dollar deficit in the banking system, and 20 One billion dollars to pay the installments and interests of medium and long-term external debt, in addition to the installments and interests of short-term loans that are larger in value, and to finance commodity imports, which average about $8 billion per month.