The Central Bank of Egypt is moving to renew a USD 2 bn Kuwaiti deposit due this month, a high-level official in the banking sector tells EnterpriseAM, noting that there is a preliminary agreement already in place. The maturing deposit is expected to be renewed under the same existing terms and will remain in place “until an agreement is reached to convert them into direct equity in companies or sectors,” the source said.

“Regional events have stalled the completion of procedures to convert USD 4 bn in Kuwaiti deposits at the CBE into investments across various economic sectors,” our source explained.

Why it matters: With a big question mark over what hard currency inflows we can expect from the Suez Canal and expat remittances moving forward, alongside a hefty energy import bill, now is not the time for a sudden withdrawal of deposits by GCC creditors in the event of further regional escalation. Keeping deposits in place, in addition to concessional and bilateral financing secured by the country, creates a vital financial safety net.

REMEMBER- In a formal letter to the IMF, Finance Minister Ahmed Kouchouk and CBE Governor Hassan Abdalla confirmed they have secured “strong assurances” that GCC states will not withdraw their USD 18.3 bn of deposits while the Extended Fund Facility is active. Saudi Arabia holds the bulk of these, with USD 10.3 bn in deposits at the CBE, including USD 5.3 bn maturing in October and the remainder classified as stable short-term deposits, our source tells us.

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