Egypt’s net international reserves (NIR) dropped to $40,108 billion as of end of March, down from $45,510 billion at the end of February, according to Central Bank of Egypt (CBE) data released late Tuesday.

The CBE attributed to decline to the unprecedented blow to global financial markets arising from the COVID-19 pandemic, which caused the sharpest portfolio flow reversal on record from emerging markets, including the Egyptian market.

It added that due to the dramatic tightening in global financial conditions, and in light of CBE’s measures, consistent with its mandate to maintain financial stability, the CBE utilised $5.4 billion from its NIR balances during March to partially cover foreign portfolio investment outflows through the CBE’s foreign exchange repatriation mechanism, and to accommodate for the domestic market’s foreign currency needs to import strategic goods, as well as for external debt service obligations.

The CBE explained that Egypt has witnessed immense improvements in its external balances as well as a real metamorphosis in the country’s risk profile that came on the back of a successfully implemented homegrown economic reform programme, and that those hard-won
gains — evident in Egypt’s economic performance — provide resilience and empower the CBE in safeguarding Egypt’s financial stability while supporting economic activity in the face of present historic challenges.

It affirmed that Egypt’s current NIR position remains strong as it covers around eight months of Egypt’s imports and outperforms reserves adequacy metrics, and enables the CBE to honour all of its external financial obligations.

The CBE added that it stands ready to take all necessary measures to preserve the stability of the Egyptian economy under the current globally unprecedented circumstances.