Egypt froze plans to introduce the Russian payment system Mir to service Russian cards at their resorts and hotels for fear of possible US sanctions. This was reported by Al-monitor, citing a source in the largest state-owned bank in Egypt. At the same time, the information in the Egyptian media is contradictory.
“Sanctions imposed on Russia by the United States and European allies forced Egyptian leaders to withdraw their support for the Mir system,” a source at the National Bank of Egypt, speaking on condition of anonymity, told the publication. According to an insider, the rise in tourist traffic to Egypt has prompted Egyptian officials to abandon plans to link the Mir scheme to Egypt's Meeza card system.
Another banking source told local news portal Masrawy last month that Egypt is also concerned that the use of the Russian payment system could undermine ongoing negotiations with the IMF for a loan to support its economy amid severe foreign exchange shortages. With over 16% of the vote, the US is the largest single voting bloc in the IMF.
Initially, the Egyptian Central Bank planned to launch the Russian system in September, but plans were put on hold amid news of Turkish banks exiting the Russian system under pressure from US authorities to impose secondary sanctions. In an open letter, the US Treasury Department warned that Turkish banks servicing Mir payments are supporting Russia in circumventing Western sanctions. It was noted that sanctions may include a ban on the use of the national American currency.
Recall that Mir is a payment scheme that operates independently of the Western financial system, allowing countries to carry out transactions with Russian banks outside the SWIFT interbank payment system and allowing Russian citizens to make digital transactions.
On the other hand, according to Lente.ru, which quotes the Egyptian newspaper Shorouk News, bank cards of the Russian payment system Mir will be accepted in Egypt in the coming days. According to the publication, allegedly hoteliers and entrepreneurs working in the field of tourism, turned to the Central Bank of Egypt with a request to expedite the procedure for introducing the Russian payment system. It was noted that the income from Russian tourists is so important for the Egyptian economy that Western sanctions will not be a reason to delay the process.
Undoubtedly, the adoption of Mir cards by Egypt would allow Russian vacationers to pay in rubles and use ATMs, expand the payment options in Egyptian hotels and resorts, and at the same time increase the flow of tourists from Russia. According to an Egyptian source, at least twice.
Egypt is one of the top five tourist destinations for Russian tourists. Russians and Ukrainians traditionally made up 40% of holidaymakers in Egypt, but their number has declined sharply after the February events.
Tourism is one of Egypt's main sources of foreign exchange income. In 2021, tourism revenue in Egypt amounted to $13 billion. Egypt's expectations for the winter season are high. For example, Fahri El-Fiki, head of the House Budget and Planning Committee, said that Egypt's central bank has been working for the past six months to link Mir with Egypt's Meeza network. According to him, this would stimulate Russian tourism and “also help Egypt pay for Russian goods, in rubles, and not in US dollars, for example, wheat.”
According to economist Medhat Nafi, the use of the ruble would give Egypt has an advantage because Cairo is a major importer of Russian wheat. “But the possibility of facing US sanctions will prevent Egyptian banks from switching to the Russian Mir system to stimulate tourism,” he explained in an interview with the publication and noted that Egypt’s trade exchange with Russia in 2021 reached $4.7 billion compared to $4.5 billion a year. earlier.
According to the state statistical agency CAPMAS, the number of tourists in Egypt increased by 85.4% this year: in the first half of 2022, 4.9 million people visited the country compared to 2.6 million last year. Eastern Europe sent the most tourists to Egypt in 2021, with a share of 50.6%, followed by the Middle East with 18.9%, then Western Europe with 16.4% and Africa with 7.1%.
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