Egypt’s reserves hit new low
The Central Bank has announced that foreign exchange reserves have reached new levels since the interim government took over in July. This report marks the third consecutive time that the reserves have been depleting. Analysts have claimed that the trend will continue till the end of the year. The country’s reserves dropped from $18,6 billion in October to $17,8 billion in November.
The Egyptian revolution has been costly to the economy. On the eve of the revolution which began in 2011, Egypt had $36 billion in reserves but the amount has been reduced to less than half within three years. Gulf countries pumped in billions of funds to revive the economy and support the interim government after the removal of Morsi from power by the military.
Hany Genena, head of research at financial group Pharos Holding, said the drop in foreign exchange reserves is due to the $2billion deposit returned to Qatar and the “settlement of dues to oil companies”. The Central Bank returned $500 million in November and December respectively to Qatar after the latter refused to renew it at its maturity. The deposit was made in late 2012. The breakdown in relations between Qatar and Egypt led to the inflexibility of former.
A deposit of equal amount made by Kuwait also matured in a year but was prolonged to more than 5years.
Economic and banking expert Bassant Fahmy said the drop was prompted by the fall in the importation of raw materials for factories. He explained that the “importing raw materials… will be a good sign” because it shows signs that the economy starts “refreshing”.
The reserves are expected to drop again as Oil Minister Sherif Ismail prepares to pay $3 billion of the $6.3 billion it owes to oil companies.