Egypt’s net foreign assets recorded their first surplus in over two years, as the second andfinal tranche of the USD 35 bn Ras El Hekma agreement brought in some USD 14 bn of fresh inflows — USD 6 bn of which the central bank poured into the nation’s banking sector. Egypt recorded a net foreign asset surplus of just under USD 14.3 bn at the end of May, up from a deficit of USD 3.7 bn in April, according to Enterprise calculations based on Central Bank of Egypt figures. This is the first time Egypt’s net foreign assets have been in the green since February 2022, when the war in Ukraine triggered capital outflows of almost USD 20 bn.

The central bank’s net foreign asset position once again drove the trend: The Central Bank of Egypt saw its net foreign assets record a surplus of USD 9.7 bn, up from a deficit of USD 763 mn in April. Foreign assets in the central bank rose USD 4.8 bn, while foreign liabilities were down by USD 5.6 bn.

Commercial banks also left deficit territory: Commercial banks saw their net foreign assets record a surplus of USD 4.6 bn in May, from a deficit of USD 2.9 bn in April. Commercial banks saw their foreign assets rise by USD 6.9 bn, while foreign liabilities were down USD 625 mn during the same period.

Data point: “Net foreign assets of Egypt’s banking system have improved by a staggering USD 43 bn since January. International support likely played a role, especially the USD 35-bn mega investment from the UAE. But the scale also suggests portfolio inflows are back,” Bloomberg Chief Emerging-Markets Economist Ziad Daoud said.

Remember: Egypt’s net foreign liabilities hit an all-time high back in January, recording USD29.0 bn, before starting to gradually drop in the months that followed following the Ras El Hekma agreement, float of the EGP, and the flood of inflows that followed.

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