Foreign reserves hit a fresh high of USD 46.5 bn in July

Foreign reserves continue their ascent: Net foreign reserves edged up by USD 105 mn in July to just under USD 46.5 bn, surpassing the previous record high USD 46.4 bn recorded in June, according to the CentralBankof Egypt

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Here’s the breakdown, according to CBE data:

• Foreign currency reserves edged down to USD 36.3 bn in July from USD 36.9 bn in June.
• Gold reserves inched up to USD 9.9 bn in July from USD 9.5 bn the month before.
• Special drawing rights grew almost 25x to USD 302 mn in July from USD 12 mn in June.

Sound smart: Special drawing rights (SDRs) are international reserve assets created by the IMF. While they are not a currency, they are a form of international money that can be used by countries to supplement their official reserves. They are primarily used for IMF transactions, such as repaying loans or increasing quotas.

On the up and up: Egypt's net foreign reserves have increased by about USD 11.2 bn in the five months since the government announced the USD 35 bn Ras El Hekma agreement, which gave the central bank the buffer it needed to float the EGP, helping attract FX liquidity back to the official banking system and paving the way for more international funds. Foreign reserves stood at nearly USD 35.3 bn in February.

No signs of slowing down: The third USD 820 mn tranche of our expanded USD 8 bn IMF loan program landed in state coffers last week after the IMF Executive Board greenlight the third loan review, which also allows us to apply for an additional USD 1.2 bn in long-term, low-cost climate financing from the IMF's Resilience and Sustainability Facility.

We have more incoming: The government has EUR 5 bn worth of concessional loans from the EU coming its way by 2027, with the first EUR 1 bn in macro-financial assistance set to land in state coffers during the second half of 2024. The World Bank has also earmarked USD 3 bn for the government over the next three years to support the government’s economic and structural reforms, social protection programs, and green transition, with the first USD 700 mn trance recently greenlit by the bank.

A look into Fitch’s crystal ball: Credit rating agency Fitch Ratings expects Egypt’s foreign currency reserves to reach USD 49.7 bn in the current fiscal year and USD 53.3 bn in the next.