Egypt's Net Foreign Asset Deficit Shrinks to 2-year Low

Data published on the website of the Central Bank of Egypt (CBE) showed that the deficit in the bank’s net foreign assets fell in March to its lowest levels in more than two years.

The deficit in net foreign assets decreased to EGP 65.38 billion ($1.39 billion) at the end of March from EGP 270.65 billion in the previous month and EGP 352.49 billion at the end of January.

Egypt obtained $5 billion in late February and another $5 billion in early March from giving rights to develop the Ras El Hekma project on the Mediterranean coast to Abu Dhabi, as part of a deal that will eventually reach $35 billion.

On March 6, Egypt allowed its currency to decline as part of an $8 billion support package from the International Monetary Fund (IMF). The pound is now trading at about EGP 48.5 to the dollar after remaining stable at EGP 30.85 for about a year.

The decline in the value of the currency prompted foreign investors to pump billions of dollars into local treasury bills and bonds, and also encouraged Egyptian expatriates to send more of their remittances into the country.

The central bank's net foreign assets slid to a deficit of EGP 93.39 billion in March 2022 from a surplus of EGP 134.35 billion in the previous month, after the Ukrainian crisis prompted foreign investors to withdraw their money from Egypt.

According to Central Bank data, the deficit shrank by EGP 217.1 billion in February to EGP 679 billion.