Egypt’s foreign reserves drop to $37 bln in April, down for second month

Doaa A.Moneim , Thursday 7 May 2020

While down, the drop in foreign reserves is not unexpected amid the fallout of the global coronavirus pandemic

File Photo: Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt March 8, 2016. (Photo: Reuters)

The Central Bank of Egypt (CBE) has reported a decline in its net international reserves (NIR) to $37.037 billion as of end of April 2020, down from $40.108 billion at the end of March.

This is the lowest level reserves have reached since January 2018 when the CBE reported reserves at $38.21 billion.

According to a CBE statement, global markets at large remain under pressure due to the persistence of the Covid-19 pandemic, which continues to drive portfolio flow reversals from emerging markets, albeit at a slower pace than in the previous month, where reverse flows peaked.

The Egyptian market, according to the statement, was no different, and for this reason the CBE continues to cover the legacy CBE foreign exchange repatriation mechanism flows as they exit the market, as well as all of the CBE's external obligations, amounting to $1.6 billion, under which falls the maturity of the 2020 Eurobond, worth $1 billion, according to the statement.

Reserves were also utilised in order to cover strategic goods necessary to ensure the wellbeing of the population, according to the statement.

“During May, the CBE and the government have also taken strong, affirmative action to preserve the achievements of the Egyptian economy by approaching the International Monetary Fund (IMF) in order to secure the fund’s Rapid Financing Instrument (RFI) and a Stand-By Arrangement (SBA) which will allow the government to address any immediate shortfalls in the balance of payments while supporting the most affected sectors and the most vulnerable segment of society,” the CBE said.

The engagement with the IMF, according to the statement, comes on the back of the successful implementation of the homegrown reform programme and the drive to ensure sustainable growth. The CBE stands ready to take all necessary measures to preserve the stability of the Egyptian economy under the current exceptional and globally unprecedented circumstances, the bank affirmed.

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