Egypt's Net Foreign Assets Record Surplus for First Time in 28 Months

Egypt's banking sector's net foreign assets turned to a surplus of about $14.29 billion for the first time in 28 months by the end of May, according to data released by the Central Bank of Egypt (CBE).

The improvement was supported by inflows from the largest investment deal with the UAE to develop Ras Al-Hikma, and the liberalization of the Egyptian pound exchange rate last March.

The average dollar exchange rate was calculated at EGP 47.33 in May, according to the Central Bank's data.

Egypt received $24 billion from Abu Dhabi-based ADQ in three installments during the months of February, March and May, in addition to settling Emirati deposits due on Egypt worth $11 billion.

The net foreign assets deficit of Egyptian banks improved by the end of April, with the total deficit decreasing to about $3.64 billion, down 13.8% on a monthly basis, after it had worsened to nearly $29 billion by the end of January.

Net foreign assets in the banking sector had started to decline since October 2021, then turned negative, meaning that foreign currency liabilities exceeded non-local currency assets, starting from February 2022, coinciding with the Russian-Ukrainian war.

Banks' foreign assets are the deposits and savings in foreign currency that can be liquidated at times when the bank needs liquidity to meet its obligations.