Egypt’s Net Foreign Assets Remain Positive for Second Consecutive Month
In a surprising turn of events, Egypt’s net foreign assets (NFAs) have stayed positive for the second month in a row, marking a significant shift from the deeply negative territory they had been in for over two years. According to data from the central bank, NFAs decreased to 626.6 billion Egyptian pounds in June, down from 676.4 billion pounds at the end of May.
At the end of June, this translated to $13.05 billion, compared to $14.31 billion at the end of May, based on Reuters calculations using the official central bank currency rate at the time. Egypt had been utilizing its NFAs, which encompass foreign assets held by both the central bank and commercial banks, to support its currency since September 2021. However, NFAs took a negative turn in February 2022.
Despite the challenging circumstances, the government took bold steps to strengthen its financial position. In February, it sold the development rights to Ras El-Hekma on the Mediterranean coast for a whopping $35 billion. In March, Egypt secured an $8 billion financial support package from the International Monetary Fund. Additionally, the country implemented a significant currency devaluation, attracting a surge of portfolio investments and remittances from overseas workers.
While foreign assets at commercial banks saw a decline in June, there was an increase in foreign assets at the central bank. On the other hand, foreign liabilities rose at both commercial banks and the central bank. The evolving dynamics of Egypt’s financial landscape continue to shape its economic outlook in the global arena.