Egypt's foreign reserves fall for the first time since the liberalization of exchange rates

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Egyptian currency reserves fell to $ 42.551 billion in December from $ 44.513 billion in November, marking the first decline since sterling was liberalized in 2016, the central bank said today.

Headquarters of the Bank of Egypt in Cairo – Photo from Reuters archive.

The previous time the country's foreign exchange reserves declined in October 2016, a month before Cairo signed a $ 12 billion three-year loan agreement with the International Monetary Fund, including the liberalization of the sterling exchange rate.

The agreement is part of efforts to attract foreign investors who left during the 2011 uprising.

The central bank did not say the reasons for the decline.

"It was a surprise," said Allen Sandeep, head of Naeem Brokerage's research, adding that he was not sure why.

Egypt plans to receive the fifth installment of $ 2 billion from an IMF loan in January. This will offset the December drop, as expected by Sandeep: "I think the reserve will return to $ 44 billion in January."

Alia Mamdouh, Beltone chief economist and strategist, said the fifth installment should be received in December, and the delay would probably have contributed to a decline in reserves.

"I do not think it's worrying, as we expect the slide to be released in January, and an international bond of $ 5 billion is expected in the first half of the year," he said.

The central bank also had ongoing commitments of $ 3 billion in December, which helped reduce foreign reserves, he said.

Egypt is carrying out difficult economic reforms in the IMF program. In addition to the devaluation, reforms included new taxes and a significant reduction in energy subsidies, which put pressure on the financial situation of tens of millions of Egyptians.

Media coverage Ihab Farouk – Additional reportage Ali Abdi Ati – Prepared by Alaa Rushdi for the Arab Bulletin – Edit Islam Yahya – Tel 0020223948031

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