Egypt's foreign exchange reserves exceed $40B for 1st time since February 2022

CAIRO - 3 April 2024: Egypt’s foreign reserves increased to $40.361 billion by the end of March 2024, compared to $35.311 billion in February, marking an increase of $5.05 billion, according to the Central Bank of Egypt (CBE).

 

The recent increase pushed Egypt's foreign reserves above the $40 billion level, marking the first time it has reached this level since February 2022, when it recorded $40.99 billion.

 

The CBE helped increase its foreign reserves through the Ras El Hikma deal, valued at $35 billion, which Egypt successfully completed with the UAE at the end of last February.

 

Under the terms of the deal, $11 billion will be transferred from UAE deposits at the Central Bank to the local currency to use these funds in the project, while Egypt will receive the remaining amount in cash.

 

Egypt is expecting the arrival of the second installment of funds from the Ras El Hikma deal at the beginning of next May, as stated recently by Prime Minister Mostafa Madbouly.

 

After the deal, Egypt was able to secure external financing commitments from several parties, totaling more than $58 billion.

 

Additionally, the International Monetary Fund (IMF) approved a $8 billion financing program for Egypt, and Egypt signed agreements with the European Union for financing worth $8 billion, and another agreement with the World Bank worth $6 billion, as well as receiving $1.2 billion from the IMF's sustainability fund.

 

Egypt's foreign reserves consist of a basket of major international currencies, including the US dollar, the euro, the British pound, the Japanese yen, and the Chinese yuan. 

 

The allocation of Egypt's holdings of these currencies is based on their exchange rates and stability in the international markets, and it varies according to a plan set by officials at the CBE.

 

The primary function of foreign reserves at the central bank, comprising gold and various international currencies, is to provide essential goods, repayments, and interest on external debts, and to address economic crises, especially under exceptional circumstances, when resources from hard currency-generating sectors are affected.

 

The Egyptian government aims to accumulate foreign reserves amounting to approximately $300 billion over the next six years. 

 

This ambitious goal, which is three times the current figure, aligns with President Abdel Fattah El-Sisi's new term, focusing on narrowing the dollar gap, and enhancing economic stability.