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Egypt's foreign reserves see first drop in year to May

Chief economist Hesham Geneina expects significant climb by September due to anticipated grants from Gulf states following president-elect Abdel-Fattah El-Sisi's inauguration

Ahram Online, Thursday 5 Jun 2014
The Central Bank of Egypt
The Central Bank of Egypt's headquarters in downtown Cairo (Photo: Reuters)
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Egypt’s Net International Reserves slightly dipped at the end of May, reaching $17.283 billion, the state’s Central Bank of Egypt (CBE) announced on Thursday.

May’s drop represents the first slump in foreign reserves since January.

In April, the NIR stood at $17.489 billion, almost unchanged from March.

“Egypt keeps paying off its debts,” said chief economist at Pharos Holdings Hany Geneina, elaborating that “the slight drop could, for instance, be attributed to the payback of the state’s dues to foreign petroleum companies.”

Tarek El-Molla, chairman of the Egyptian General Petroleum Corporation, said in May that Egypt's debt to foreign oil companies rose to $5.9 billion by the end of April from $4.9 billion in December of last year.

Egypt paid back $1.5 billion at the end of last year, a signal that the government is attempting to encourage firms to invest again in extraction and exploration, badly needed to help address a severe energy crunch afflicting the country.

Oil Minister Sherif Ismail said in February the government hoped to schedule repayments of around $3.5 billion that will be completed by 2016.

Geneina expects the country's reserves to climb to a $20 billion-$25 billion range by September and October thanks to projected grants from oil-rich Arab Gulf states following the official inauguration of president-elect Abdel-Fattah El-Sisi.

Former army chief El-Sisi achieved a landslide victory in the presidential elections concluded last week.

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