Egypt's forex reserves hit record high in February

05 Mar 2018

Egypt's foreign exchange reserves exceeded 42.5 billion U.S. dollars by the end of February, the highest in the country's modern history, the Central Bank of Egypt (CBE) said in a statement on Sunday.

'Egypt's forex reserves reached 42.52 billion dollars by the end of February 2018,' said the CBE.

At the end of January, the country's forex reserves exceeded 38.2 billion dollars from about 37 billion dollars a month before.

Egypt's forex kept declining from 36 billion dollars in January 2011, just before the uprising that ousted former President Hosni Mubarak, until the figure dropped to an alarming level of 13.5 billion dollars in February 2013, a few months before the ouster of former Islamist President Mohamed Morsi.

Over the past few years, Egypt has been suffering an economic recession due to political instability and relevant security issues that led to the decline of tourism and foreign investments, two major sources for Egypt's foreign currency reserves.

The situation started to pick up under President Abdel-Fattah al-Sisi, who, as the army chief then, led Morsi's ouster in response to mass protests and was supported by billions of dollars from oil-rich Gulf states, including Saudi Arabia, the United Arab Emirates and Kuwait.

Since then, improving security conditions, and increasing remittances of Egyptian expatriates, in addition to foreign loans and deposits, have gradually refilled the CBE with foreign funds.

'The recent forex rise is attributed to the finance ministry's sale of international bonds of 4 billion dollars in February,' Ehab al-Desouki, the head of the Economy Department of Cairo-based Sadat Academy, told Xinhua on Sunday.

'The forex rise is a good step that gives confidence in the Egyptian economy, helps it face pressures, and reassures the world economic community about its abilities,' the expert noted.

According to al-Desouki, Egypt has a lot of chances to improve its economic conditions, particularly after the approval of the new investment law that encourages business and facilitates investment.

Egypt's foreign debts rose to 81 billion dollars, according to a statement from Finance Minister Amr al-Garhy in mid-January.

A CBE official said in January that Egypt paid off about 30 billion dollars of financial dues and foreign debts in 2017 and the country commits itself to paying back more than 12 billion dollars in 2018.

The repayments cover bonds and foreign debts to regional and international banks, deposits and loans from countries like Saudi Arabia, Libya and Turkey, commitments by government bodies to world companies, as well as dues to the Paris Club.

In order to boost economy, bolster forex reserves and deal with dollar shortage, Egypt started in late 2016 a strict three-year economic reform program including austerity measures, energy subsidy cuts and tax increases, in addition to currency floatation, which led to nationwide price hikes though.

Egypt's reform program is encouraged by a 12-billion-dollar loan from the International Monetary Fund, half of which has already been delivered to the most populous Arab country.


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