Egypt Seeks To Raise Foreign Reserves To US$22 Bln By June, 2014

The Egyptian government plans to increase foreign reserves to US$ 22 billion by the end of the next fiscal year. The country’s foreign reserves fell from US$ 36 billion in December 2011 to US$ 13.4 billion at the end of last March.

The value of foreign reserves held by the Central Bank of Egypt (CBE) have sharply dropped after 2011’s revolution as tourism income, exports revenues and foreign investments have fallen which accordingly dampened the volume of dollar inflows to the country.

After the drop in foreign currency, CBE used foreign reserves to meet the country’s requirements, supply the basic needs of citizens and provide banks with dollar liquidity.

A recent statement has revealed that CBE offered the Egyptian General Petroleum Corporation (EGPC) US$ 9.3 billion during 2011 and 2012 to pay dues to partners and import its needs. The central bank also paid US$ 8.5 billion to pay the country’s sovereign debts during the last two years.

This dampened the value of foreign reserves to US$ 13.4 billion at the end of last March. Accordingly, the government seeks foreign borrowing to shore up the international reserves. Qatar granted Egypt a grant worth US$ one billion and transferred US$ 4 billion to Egypt’s central bank as a deposit. There are also talks with Qatar to receive US$ 3 billion which will be invested in treasury bonds. Turkey also transferred US$ 2 billion to CBE and Libya granted Egypt US$ 2 billion worth of interest-free five-year loan.

The Egyptian government is in talks with the International Monetary Fund (IMF) to receive US$ 4.8 billion loan. If the government succeeded in securing the IMF loan, it will be able to receive aids and loans from other lenders such as the World Bank, European Union, African Development Bank and United States of America, so as to be able to raise foreign reserves to US$ 22 billion.