CAIRO: Egypt’s net foreign currency reserves fell by around $825 million in November, the country’s central bank reported Sunday, the sharpest drop since a large injection of aid from Gulf countries five months ago.
The central bank reported the foreign currency reserves stood at $17.76 billion by the end of last month. It was the third successive fall since July, when Egypt received major Gulf aid pledges, boosting state coffers to $18.8 billion – their highest level in almost two years.
Mohammad Abu Basha, an economist with Egypt’s largest investment bank EFG-Hermes, said a Qatari deposit of $500 million had expired and the Gulf state didn’t want to extend it, causing the sharp drop in reserves in November.
Qatar was the main backer of the country’s Islamist President Mohammad Morsi, ousted in a popularly-backed coup in July. Qatar had propped up the economy with some $8 billion in aid during Morsi’s one year in office.
Following his ouster, Egypt’s reserves were boosted after Saudi Arabia, the United Arab Emirates and Kuwait pledged a total of $12 billion dollars in a mix of grants cash deposits. These Gulf countries were at odds with Morsi and his Muslim Brotherhood group.
Abu Basha said another Qatari deposit was due to expire next month, and would likely cause a similar drop in foreign reserves.
“The whole external position is based on foreign support” from the Gulf countries, Abu Basha said. “That is what is keeping us comfortable ... and you know it will keep coming.”
Another $5 billion is pledged from Saudi Arabia, Kuwait and Emirates, he said, but it is not clear when it will be delivered.
In June, reserves stood at just $14.9 billion, less than half of what they were before the political upheaval that hit the country following the uprising against longtime autocrat Hosni Mubarak in 2011. Since then, deteriorating security and political instability have scared away foreign investors and tourists – hurting major foreign currency earners.
The current government has also promised to pay foreign oil companies $1.5 billion, nearly a quarter of arrears it owes them, by the end of the fiscal year 2013-14. It is not clear how much of the sum will come from the central bank. Government officials said they would likely begin paying them this month.