Egypt’s international reserves inch up slightly in April

Doaa A.Moneim , Sunday 8 May 2022

Egypt’s net international reserves (NIRs) rose slightly in April to $37.1 billion, up from $37 billion posted in March, the Central Bank of Egypt (CBE) announced on Sunday.



As a result of ongoing challenges, particularly the war in Ukraine as well as rising food and energy prices, CBE’s NIRs in March dropped for the first time since May 2020 by about $4 billion, down from $40.9 billion recorded in February – prior to the war breaking out.

In April, Fitch Ratings affirmed Egypt’s long-term foreign-currency issuer default rating (IDR) at B+ with a stable outlook, which reflects the country’s liability to fulfill its international financial obligations.

Fitch attributed such a drop to portfolio outflows and CBE interventions to smooth exchange-rate volatility through devaluing the Egyptian pound by 14 percent on the heel of the Russian war in Ukraine.

Moreover, foreign holdings of local-currency government debt fell to $17.5 billion by mid March, a decline of $11 billion from the end of 2021 and $16 million from their all-time high recorded in September 2021, according to Fitch.

In addition, Standard and Poor’s (S&P) maintained Egypt’s long and short-term foreign and local currency sovereign credit ratings at B/B.

However, S&P warned that it could downgrade Egypt’s credit ratings over the next 12 months in case the rising commodity prices has negative prolonged effects on the country’s external position, which could cause a decline in foreign exchange reserves and a reduction in its ability to service debt and interest payments.

During February and March, Egypt received around $20 billion in deposits from UAE, Saudi Arabia and Qatar.

Moreover, the Abu Dhabi Developmental Holding Company (ADQ), known as the Abu Dhabi wealth fund, completed in April acquisition deals for five companies in Egypt, including private sector and state-owned firms, with a total value of $1.8 billion.

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