FILE - CBE
CAIRO – 7 May 2020: Egypt’s foreign reserves decreased by about $3.1 billion, recording $37.037 billion by the end of April 2020, compared to $40 billion during March 2020, according to the Central Bank of Egypt (CBE).
Since March, CBE has announced using foreign reserves money to cover the Egyptian market's needs of foreign exchange, the drop in foreign investments and international portfolios.
Despite the decline in figures, the current average of foreign reserves covers about 8 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.
In April, Prime Minister Mostafa Madbouli announced that the Egyptian government and the Central Bank have requested a financial package from the International Monetary Fund (IMF), according to the Rapid Funding Tool program (RFI) and the SBA program.
This package is to enhance the state’s capabilities to face the new COVID-19 virus crisis, in a proactive step based on the successful implementation of the economic reform program; to maintain the continuing gains and positive results achieved by the Egyptian economy, in light of the exceptional circumstances experienced by all countries of the world and developments in global conditions.
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).
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.