Egypt’s net foreign assets surge in May to create 1st surplus since 2022

Cairo – July 1, 2024: Egypt’s net foreign assets (NFAs) surged in May, reporting a surplus for the first time in more than two years after reporting a surplus of $14.3 billion, compared to April’s deficit of $3.7 billion, according to recent figures from the Central Bank of Egypt (CBE).

The new surplus reflects the country’s rapid recovery from previous deficits, which almost reached a high of $30 billion earlier this year, exacerbated by external economic challenges.

The country’s NFAs have been in the red since February 2022, after the Russian/Ukraine war triggered $20 billion worth of capital outflows as foreign investors pulled out amid concerns about local and global economic stability.

Foreign assets in the CBE saw an uptick, recording a surplus of $9.7 billion in May, up from a deficit of $763 million just a month earlier.

Commercial banks saw their net foreign assets climb to a surplus of $4.6 billion, a significant growth from the $2.9 billion deficit recorded in April.

The turnaround can be largely attributed to the substantial influx of foreign funds as Egypt received the second and final tranche of the Ras El Hikma agreement.

“The scale of improvement in Egypt's net foreign assets is staggering,” remarked Ziad Daoud, Chief Emerging-Markets Economist at Bloomberg. “The influx of portfolio inflows and international investments, particularly the $35 billion mega-investment from the UAE, has played a pivotal role in this resurgence.”

Egypt’s net foreign liabilities hit a record high earlier this year, amounting to $29 billion in January, however, with strategic economic measures including the float of the Egyptian pound and agreements like Ras El Hikma, the government has been able to steadily reduce liabilities.