The epitome of over-dependence: Egypt’s reserves fall $600 million due to suspension of Gulf aid
Egypt’s net international foreign reserves fell by $600m, recording $16.68bn at the end of June, down from $17.28m in May, the Central Bank of Egypt (CBE) announced on Monday.
Foreign reserves are now the lowest since the ouster of former president Mohamed Morsi in July 2013, when they saw a jump following a total Gulf aid package of $12bn, in the form of cash grants, deposits and petroleum products.
However, foreign reserves declined continuously from September until the end of December.
Financial analyst at EFG Hermes Mohamed Abo Basha commented that the decline came because no financial aid was pledged to Egypt in the last month, whether in the form of grants or deposits.
Echoing that opinion, banking expert Ahmed Adam explained that the Gulf aid was being gradually sent over the past months until April, which he said was keeping the reserves stable.
Adam also attributed the fall to repaying part of Egypt’s debt to the Paris Club. On 4 July, Egypt paid $700m of its debts to the Paris Club of creditor nations, Governor of CBE Hisham Ramez announced on Sunday.
Adam did not expect additional financial assistance from Gulf countries in the next period.
At the end of September 2013 foreign reserves amounted $18.7bn, a $0.2bn drop from August numbers. Reserves fell to $18.59bn in October, $17.76bn in November and $17.05bn in December.
The rise of reserves started in January, reaching $17.105bn, and continued through February to register $17.3bn, $17.41bn in March and $17.48bn in April.
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