Egypt’s International Reserves Soar to $40.361 Billion Amid NFA Deficit Reduction
In a notable development, the Central Bank of Egypt (CBE) has reported a substantial increase in the country’s international reserves, which surged to $40.361 billion at the end of March 2024, up from $35.311 billion in February. This $5.05 billion rise highlights the nation’s endeavors to bolster its financial stability and attract investor confidence.
NFA Deficit Hits Two-Year Low
Simultaneously, Egypt’s net foreign assets (NFA) deficit witnessed a dramatic reduction in March, marking its lowest point in over two years. By the end of March, net foreign assets had dwindled to EGP65.38 billion ($1.36 billion), plummeting from EGP270.65 billion recorded in February. This decline continued the downward trend from January’s EGP352.49 billion. The CBE attributes this remarkable improvement to pivotal transactions within the property development sector and the implementation of crucial currency reforms.
Ras El Hikma Deal Spurs Financial Gains
The financial turnaround was significantly driven by lucrative transactions related to the Ras El Hikma development project, with Egypt procuring $5 billion in February, followed by an additional $5 billion in early March. These deals are part of an encompassing agreement valued at $35 billion, which has been instrumental in ameliorating the NFA deficit.
Currency Flotation Yields Strategic Benefits
In alignment with Egypt’s loan agreement with the International Monetary Fund (IMF), the country executed comprehensive currency reforms which led to the depreciation of the Egyptian pound. The currency now stands at EGP48.36 per U.S. dollar. This strategic move is anticipated to attract foreign investment into local treasuries and boost remittances to Egypt.
Last year, the central bank’s net foreign assets were in deficit by EGP93.39 billion in March 2022, a stark contrast to the surplus of EGP134.35 billion noted in February 2022. The financial turbulence had been partly ascribed to the Russia-Ukraine conflict, which precipitated a withdrawal of foreign investments from Egypt.
The latest figures underscore Egypt’s concerted efforts to recalibrate its economic framework, invigorate investor trust, and ensure robust fiscal health in a challenging global economic landscape.
For more on economic developments, visit Economy Middle East.
Source: Central Bank of Egypt (CBE)
