Egypt's foreign reserves plunge $2 billion in April

Ahram Online and Reuters, Thursday 5 May 2011

Egypt's foreign reserves took a battering amid political upheaval in the country, investment authorities reveal

Egypt's foreign reserves fell sharply at the end of April to $28.02 billion.

Foreign investment in Egypt fell by $400 million in the first quarter compared with the same period in 2010, as political instability rattled investor confidence in the country, Osama Saleh, the head of the General Authority for Investment (GAFI) said Wednesday.

Foreign investment in the first three months of 2011 came to $1.2 billion, he added.

International investors withdrew funds from Egypt in the wake of a popular uprising that forced president Hosni Mubarak out of office and put a brake on economic growth.

GAFI had said in April that Egypt approved investment incentives that will simplify procedures for new industrial projects and make it easier to set up franchises.

Egypt is faced with a yawning budget deficit, which is forecast to widen to 9.38 per cent of gross domestic product (GDP) in the 2011/12 fiscal year, the country's finance minister said earlier this week.

The loss of foreign reserves is of about $8 billion since the beginning of this year, ending at $28.02 billion by the close of April compared with $30 billion at the end of March.