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Tuesday, 27 July 2021

Egypt's reserves climb 34% in April

Waad Ahmed , Wednesday 6 May 2015
Central Bank of Egypt (Photo: Reuters)

Egypt's foreign reserves climbed to $20.53 billion in April, up 34 percent from the previous month, following the reception of new deposits of up to $6 billion from the Gulf.

Foreign reserves, which dropped sharply following the 2011 uprising, had been expected to increase in April, after Gulf Arab countries pledged $12 billion in aid and investments to Egypt during an investment conference in March.

The increase in reserves has also indirectly reduced the currency black market, Angus Blair, the chairman of business and economic forecasting think-tank Signet, told Ahram Online.

Earlier this year, the Central Bank of Egypt (CBE) devalued the pound by up to 6.9 percent in a quest to eliminate a currency black market that emerged after Egypt's 2011 popular uprising caused investors to flee and tourism revenues to tumble.

But a lack of foreign currency liquidity could push traders to return to the black market, an issue temporary solved by the rise of foreign reserves in April.

Egypt has been drawing down on its foreign exchange reserves, "because Egypt continually runs a trade deficit -- unless you’ve got more capital coming in, particularly from tourism or foreign direct investment,” Blair explained.

Egypt has traditionally depended on revenues from the Suez Canal and tourism as its main sources of foreign currency, but the latter took a hit with the political upheaval and sporadic violence linked to two popular uprisings in four years.

During a much-celebrated investment conference in the Red Sea resort town of Sharm El-Sheikh in mid-March, Egypt signed investment deals worth $36.2 billion, in addition to $18.6 billion for engineering, procurement and construction (EPC) contracts and loans totaling $5.2 billion.

Egypt estimates that its tourism revenues will increase to $26 billion by 2020, compared to a current projection of $9.5 billion for 2015, Tourism Minister Khaled Ramy said last month.

Reserves stood at about $36 billion before the 2011 uprising.

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