According to historical data from the Central Bank of Egypt, which Iqtisad viewed by Sky News Arabia, this is the first time that Egypt’s foreign reserves have exceeded the levels of $35 billion since May of 2022.
Public finances in Egypt are suffering from a crisis of hard currency shortages, which increased in severity as of early last year after about $20 billion of hot money left the Egyptian markets, following the major central banks, led by the US Federal Reserve, raising interest rates to levels we have not seen for about a year. Two decades with the aim of curbing inflation sparked by the Ukraine war.
Under the pressure on its financial resources, Egypt devalued its currency in March 2022 and followed this with several reductions after it had kept the exchange rate fixed against the dollar for a year and a half. The pound has lost half its value against the dollar over the past eighteen months.
The major rating agencies, Moody’s, Fitch and S&P Global, lowered Egypt’s credit rating against the backdrop of increased risks to Egypt’s external financing and rising debt to unprecedented levels.
But the Egyptian Minister of Finance, Mohamed Maait, said on Saturday that the Egyptian government has identified sources for providing external financing needs until the end of the current fiscal year, estimated at $4 billion, with the aim of continuing to diversify international markets, especially after we succeeded in returning again to the Japanese markets, and implemented the issuance. The second international Samurai bond worth 75 billion Japanese yen, equivalent to about half a billion dollars, with distinct pricing for a periodic return of 1.5 percent annually, with a maturity of 5 years, and the issuance of sustainable international bonds on the Chinese “Panda” financial market, which are allocated to finance projects worth about 3.5 billion Chinese yuan. Equivalent to about half a billion dollars.
Maait also stressed that his country is still able to provide external financing needs in a way that reflects its sufficient flexibility in facing the internal and external challenges resulting from geopolitical tensions.
He explained that the Egyptian government has paid $52 billion in foreign obligations during the past two years, despite the extremely severe global economic challenges.
The Egyptian Minister of Finance pointed out the possibility of Egypt obtaining about $5 billion annually on favorable terms from multilateral development banks.
It is noteworthy that the foreign currencies in Egypt’s foreign reserves consist of a basket of major international currencies, which are the US dollar, the single European currency “Euro”, the British pound, the Japanese yen, and the Chinese yuan, a percentage of which Egypt’s holdings are distributed on the basis of the exchange rates of those currencies and the extent of their stability in international markets. It changes according to a plan drawn up by officials of the Central Bank of Egypt.
The Central Bank’s foreign exchange reserve balance increased during the month of September to record $34.970 billion, compared to $34.93 billion at the end of August.
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