CAIRO: Egypt’s net foreign reserves fell $596 million to $16.687 billion by the end of June, down from $17.283 billion in May, the Central Bank of Egypt (CBE) announced on its official website Monday.
In May, the foreign reserve dropped $205 million to $17.283 billion, down from $17.489 billion in April. The foreign reserve allows the government to purchase basic commodities, such as wheat and petroleum products, to pay off premiums and interest on foreign debts.
The decline comes shortly after Egypt repaid a $700 million six-month premium on the foreign debt owed to the Paris Club on July 4. This premium is considered Egypt’s first foreign repayment in hard currency since President Abdel Fatah al-Sisi was inaugurated.
On Jan. 2, the CBE repaid a $700 million premium to the Paris Club, an informal group of financial officials from 19 of the world’s largest economies. The group provides financial services, including debt restructuring relief and cancellation to indebted countries and their creditors.
“Egypt did not and will not fail to repay its external debt premiums on time,” CBE Governor Hisham Ramez told Youm7 in mid-December.
Egypt’s foreign reserves experienced a sharp decline after former President Hosni Mubarak’s resignation in 2011—from $35.8 billion at the end of December 2010 to only $17.489 billion in April from $17.414 billion in March this year according to CBE data.
The reserve saw slight recovery after former President Mohamed Morsi’s ouster in 2013 due to $12 billion in aid pledged to Egypt from Saudi Arabia, Kuwait, and the United Arab Emirates.
Sisi’s landslide victory in the presidential election will pave the way for pending aid and grants, especially after the resumption of talks with the International Monetary Fund (IMF) in the coming period.
Saudi King Abdullah bin Abdul Aziz called for a donor conference to help boost the Egyptian economy in a congratulatory cable to Sisi following his election win, according to Saudi state news.
Egyptian Private Equity Association head Hany Tawfik told The Cairo Post in June that Sisi’s victory will help regrow tourism and foreign direct investments, two key sources of hard currency that have been hurt dramatically by political upheaval since 2011.
Tawfik also urged the upcoming government to inject cash aid into projects and investments to generate revenue and reduce the soaring unemployment rate rather than covering the budget deficit.