Egypt’s net foreign asset position improved marginally in August to negative USD 25.9 bn from negative USD 26.3 bn the month prior, according to Enterprise calculations basted on Central Bank of Egyot figures. This marks the second consecutive month that net foreign liabilities have fallen after reaching a record high of USD 27.1 bn in June.

It was because of the central bank: The Central Bank of Egypt’s net foreign liabilities narrowed to USD 9.4 bn from USD 10.1 bn in July, according to the figures.

FX liquidity in the banking system deteriorated: Net liabilities in the banking system widenedto a bit over USD 16.5 bn from USD 16.2 bn the previous month.

ICYMI- Net foreign assets in the banking sector have deteriorated heavily over the past two years, swinging from a EGP 26.4 bn surplus in June 2021 to a record EGP 529 bn deficit(USD 17.1 bn) in June this year due to the ongoing FX crunch.

Some pundits think August’s marginal improvement could be a blip: Fitch said last month that Egypt’s net foreign asset position will likely get worse before it gets better, pointing to a combination of outflows of FX, import backlogs, and a managed exchange rate.

Remember: We remain in the grip of an ongoing hard currency shortage, triggered in part by major foreign portfolio outflows as global economic conditions tightened following the outbreak of the Russia-Ukraine war. This also comes as we face what Goldman Sachs recently warns is a USD 11 bn funding gap in the next five years and a wall of foreign debt repayments coming due over the coming decade.

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