Foreign currency reserves fall by $1.1 billion

By Asmaa Nabil

Last July, foreign currency reserves declined by $1.1 billion, reaching $14.44 billion compared to $15.5 billion at the end of June.

The Central Bank of Egypt (CBE) attributed the decline to Egypt’s obligation to repay bonds it held, in addition to the repaying of a credit portion to Paris Club countries. This is the first decline since last March when currency reserves began to increase.

Osama El-Manyalawy, an official with Société Arabe Internationale de Banque (SAIB) said that paying the obligations and dues in July greatly contributed to the decline in Egypt’s foreign currency reserves in addition to increasing value of foreign currencies.

Economic imbalance is also attributed to the relative instability of the governments various ministries as new appointees familiarise themselves with their new roles. This imbalance requires accelerating the IMF procedures to grant Egypt a loan, which will slow down the reserves depletion. Currently, the foreign reserves in Egypt cover only 3 months of consumer imports, compared to 8.6 months in June 2010 according to consumer import rates during the 2010-2011 fiscal year.

Foreign currency reserves have greatly declined by total of $21.7 billion since January 2011, valued at USD 36.1 billion at the end of December 2010.

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