Foreign reserves largely stable in February in the absence of major debt repayments
Egypt’s Net International Reserves (NIR) were largely stable in February at USD26.5bn from USD26.4bn in January, data released by the Central Bank of Egypt (CBE) shows. The stability was largely driven by revaluation of the bank’s gold holdings which inched up by USD0.17bn during the month. The stable reserve reading comes as no surprise in light of the absence of any major debt repayments or major sources of inflows. Improvements in the current account, as the trade deficit shrinks post a sharp EGP devaluation, tourism slightly picks up and remittances recover, is also contributing to the stable reserve numbers, in our view. Meanwhile, the CBE continued for the second month in a row to report foreign portfolio inflows into the local debt market in a separate account (tier II reserves) with the balance rising by a total of USD1.1bn M-o-M in February to a total of USD2.4bn. We expect reserves to rise in the coming two months as the country receives second loan tranches from both the World Bank and the African Development Bank worth USD1.5bn. Second installment of the IMF loan is, however, likely to be pushed to June in light of an expected delayed visit by the IMF’s review mission.
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