The Central Bank of Egypt (CBE) said, on Thursday, that Egypt’s net international reserves increased about $125m to record $40.468bn in May, compared to $40.343bn in April 2021.
Egypt’s international reserves consist of foreign currencies (FX), gold, special drawing rights (SDRs), and net loans from the International Monetary Fund (IMF).
The gold reserves increased by about $281m to $4.409bn in May, compared to $4.128bn in April.
The detailed figures for international reserves revealed a $29m decline in the value of FX reserves during May to reach $36.033bn in May, compared to $36.062bn during April 2021.
The balance of SDRs also decreased by about $127m to reach $33m compared to $160m in the comparison period.
The objective of the international reserves is to support the currency, fulfil the state’s external obligations, and guarantee its imports of basic commodities for several months. The size of the reserve for any country represents a source of strength or weakness according to its value and ability to fulfil the state’s foreign exchange obligations.
The resources of the Suez Canal Authority (SCZone), tourism, export, foreign investment, and remittances from workers abroad are the most important resources that feed Egypt’s reserves.
It is noteworthy that despite the $6bn decrease in FX reserves during 2020, it was able to face the repercussions of the novel coronavirus (COVID-19) outbreak.
The reserve’s steadfastness came in the face of the turbulence over 2020, supported by the CBE’s success in building up strength before the COVID-19 outbreak. It reached unprecedented record levels, the highest in the history of Egypt, having reached about $45.510bn in February 2020, which contributed to increasing the ability to support the state in light of the global health crisis.
Ramy Aboul Naga, Deputy Governor of the CBE, had indicated in earlier statements that the building of international reserves at unprecedented levels before the crisis, and the widespread implementation of structural reforms, ensured Egypt was better prepared to face external shocks.