Eurobonds, IMF tranche lead to high foreign reserve forecast

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Sun, 04 Jun 2017 - 06:00 GMT

Currency Notes- Staff Photo

Currency Notes- Staff Photo

CAIRO – 4 June 2014: Egypt's foreign reserves are predicted to rise in May and June as an influx of foreign currency is expected to reach the state coffers in the near term.

Banking sources told several local media outlets this week that that foreign reserves at the Central Bank of Egypt (CBE) will reach $32 billion by the end of June, up from $28.64 billion at the end of April, which was the highest level since 2011.

The increase is justifiable was the proceeds of $3 billion Eurobond sale issued by the Egyptian government at the end of May along with yields of treasury bonds and expected loans were anticipated to reach the central bank by May-end.

Also, the second tranche of a $12 billion extended fund facility from the International Monetary Fund (IMF) in the amount of $1.25 billion is expected in June, after receiving $2.7 billion in November as the first tranche.

Foreign reserves hiked in April mainly driven by fresh financing from multilateral banks: $1 billion from the World Bank, the second tranche of a $3 billion loan agreement, and a $500 million second tranche of a similar loan from the African Development Bank.

The CBE had $36 billion in foreign reserves before the January 25 Revolution in 2011 which overthrew President Hosni Mubarak after 30 years in power, but political turmoil and security concerns took a heavy toll on tourism and foreign direct investment, two key sources of hard currency, draining more than 50 percent of Egypt’s reserves.

Egypt has reaped some early fruits from the reforms adopted so far, with foreign investors returning strongly to both the stock and local debt markets and significant improvement in remittances from Egyptians abroad and the country's balance of payments.

During the first half of fiscal year 2016/17, the overall balance of payment recorded a surplus of $7 billion against a deficit of $3.4 billion in the same period a year earlier, according to the CBE.

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