Egypt’s biggest state-owned lenders are dangling higher returns on dollar-denominated certificates of deposit to foreigners and locals, in the latest push to tackle the country’s worst foreign currency crisis in years.

The new three-year certificates, which pay a guaranteed rate for a fixed period, from National Bank of Egypt SAE and Banque Misr SAE offer 9% per year, with the interest to be paid upfront in Egyptian pounds, the state-run Middle East News Agency said.

Both banks will also extend a 7% annual rate certificate that pays out interest quarterly in dollars. The minimum certificate value is $1,000. The lenders will begin offering the CDs on July 26.

Heavily exposed to the fallout from Russia’s invasion of Ukraine, Egypt is seeking liquidity to clear a backlog of foreign-currency requests from importers and other companies. It also needs to ease pressure on the pound, which is available at a weaker level in the black market.

While the pound currently trades at about 30.9 per dollar at banks, it now changes hands on the black market at around 38.

Read More: Egypt Races to End Pound Dilemma in Hunt for Gulf, IMF Cash

Authorities have devalued the Egyptian pound three times since March 2022 but have kept it stable in recent months despite saying they’re shifting to a more flexible exchange-rate regime after years of managing the currency — a policy that depleted the country’s reserves.

The promise of higher returns to savers can help reduce a decline in remittances and the hoarding of dollars by businesses and people worried about a potential new devaluation.

The pledge to loosen the reins on the currency helped Egypt secure a $3 billion deal with the International Monetary Fund. Energy-rich allies in the Gulf have also deposited $13 billion in Egypt’s central bank and vowed more than $10 billion in investment to help the country get through its economic crisis.

NBE is also offering Egyptian expatriates loans of up to four years guaranteed by their salaries, according to MENA. Loan installment are to be paid through the transfer of foreign currency from abroad.

Goldman Sachs Group Inc. estimates Egypt faces “an accumulated funding gap” of about $11 billion by the end of fiscal year 2027-2028 relative to the IMF’s baseline projections made last December.

“Egypt is on course to experience a funding shortfall in the absence of further external adjustments,” Farouk Soussa, an economist at Goldman, said in a report. “The weakness of FX buffers leaves the balance of payments particularly vulnerable to further external shocks.”

(Updates with Goldman comments in final two paragraphs.)

Author: Mirette Magdy and Tarek El-Tablawy