Egypt's foreign reserves surge to $41.1B, reaching a four-year high

CAIRO – 8 May 2024: Egypt's net foreign reserves soared to $41.1 billion by the end of April 2024, marking the highest level attained in over four years. The Central Bank of Egypt released figures confirming an increase of $696 million in net international reserves during April, underscoring the country's growing economic strength.

These impressive figures align with Fitch Ratings' recent projections, which estimated Egypt's foreign currency reserves to reach $49.7 billion in the current fiscal year and $53.3 billion in the following fiscal year. The rating agency has also upgraded Egypt's long-term foreign-currency Issuer Default Rating (IDR) outlook from Stable to Positive, while maintaining the IDR at 'B-'. This rating adjustment reflects Egypt's enhanced economic resilience and reduced external vulnerabilities.

Fitch Ratings has attributed the positive outlook to several key factors. Firstly, Egypt has successfully mitigated immediate external financing risks through strategic initiatives such as the Ras El Hekma deal with the United Arab Emirates (UAE), the implementation of a flexible exchange rate, and the enforcement of stricter monetary policies. These measures have not only facilitated additional financing from international financial institutions but have also stimulated renewed inflows of non-resident capital into the domestic debt market.

The Ras El Hekma deal, in particular, has played a pivotal role in fortifying Egypt's economic position. This agreement, forged between Egypt and the UAE, has provided a significant boost to the country's foreign reserves and bolstered its economic stability.

The implementation of a flexible exchange rate has further contributed to Egypt's economic success. By allowing the market to determine the value of the Egyptian pound, the country has been able to attract foreign investment and ensure a more sustainable balance of payments.

Furthermore, stricter monetary policies have been instrumental in maintaining financial stability. These policies have helped curb inflationary pressures, stabilize the economy, and instill confidence among investors, both domestic and foreign.