CAIRO – 8 January 2018: Egypt’s foreign reserves dropped by $1.96 billion by the end of December 2018 to reach $42.551 billion, compared to $44.513 billion by the end of November 2018, according to the Central Bank of Egypt (CBE).
Deputy Governor of CBE for the Monetary Reserve and Markets Sector Ramy Abu al-Naga told Egypt Today that the decline of the reserves during December came due to obligations that were paid in the closing of 2018 year.
He added that the reasons behind the drop included the payment of the dues of treasury bills to investors abroad and the dues of debt and external obligations to ministries and government agencies.
Egypt spends an average of $5 billion monthly on imports with an annual total of more than $60 billion. The current average of foreign reserves covers about eight months of Egypt's commodity imports, which is higher than the global average of about three months of commodity imports.
Foreign currencies in Egypt’s foreign reserves include the U.S. dollar, euro, Australian dollar, Japanese yen and Chinese yuan.
The main function of the foreign exchange reserve, including its gold and various international currencies, is to provide commodities, repay the installments on interest rates of external debt, and to cope with economic crises.
Egypt embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, with the aim of trimming the budget deficit.
The country floated its currency in November 2016 before it clinched a $12 billion loan from the International Monetary Fund (IMF).
In November when foreign reserves hit $44.5 billion, Minister of Finance Mohamed Ma’it commented that the stated figure covers the imports for 9 months, which is an unprecedented period.
CAIRO - 4 December 2018: Egypt's foreign reserves increased by $12 million by the end of November 2018 to reach $44.513 billion, compared to $44.501 billion by the end of October 2018, according to the Central Bank of Egypt (CBE).
The state’s foreign reserves started to rebound after the delivery of the $12 billion three-year International Monetary Fund loan program in 2016.
The IMF Executive Board approved in November 2016 a three-year extended fund facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.
On Oct. 31, IMF and Egypt reached a staff-level agreement to offer Egypt the fifth installment of IMF’s $12 billion extended fund facility arrangement, amounting to $2 billion.
CAIRO - 31 October 2018: The International Monetary Fund (IMF) has reached a staff-level agreement with the Egyptian government, to offer Egypt the fifth settlement of IMF's $12 billion extended fund facility arrangement, amounting to $2 billion, an official statement said Wednesday.
Egypt should have received the fifth installment of IMFs loan by December but IMF postponed a review of Egypt's economic reform program.
An Egyptian Senior Official source attributed earlier the delay to talks over some elements of the government’s economic program, stating IMF insisted on the timing of the announcement about the fuel pricing mechanism, as one of the main issues discussed. “The mechanism links local fuel prices to international ones, and is a key part of the government’s plans to cut costs.”
By receiving the fifth installment, the total disbursements under the program will reach about $10 billion.
CAIRO - 25 December 2018: Egypt intends to increase the price of 95 octane gasoline in March with plans to announce the pricing mechanism by the end of December, a senior Egyptian official source told Bloomberg. "That grade of gasoline is one which is no longer subsidized.
Additional Reporting Ahmed Ya’coub
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