The Central Bank of Egypt (CBE) announced on Monday that foreign reserves reached $15.8bn at the end of November 2014, marking a $1.1bn decrease from $16.9bn in October.
Commenting on this decline, Fakhry Elfiqy, Professor of Economics at the American University in Cairo (AUC) and former assistant to the executive director of the International Monetary Fund, said that repaying accrued deposits to Qatar was the main reason behind this decline.
Elfiqy said that Egypt had to pay $2.5bn to Qatar in November , $1.1bn of which were deducted from foreign reserves and the remainder of which were paid from revenues generated from the Suez Canal and tourism, as well as $1bn sent from Kuwait as part of a financial package provided to Egypt.
According to Elfiqy, despite the decline, the current amount of foreign reserves is nonetheless enough to cover Egyptian import needs for the next three months and two weeks.
He also added that the lowest rate of foreign reserves Egypt had reached was approximately $13bn.
Elfiqy claimed that, by paying the $2.5bn to Qatar, Egypt’s total accrued debts decreased from $46.5bn to $44bn.
He added that next month’s foreign reserves will remain stable, noting that while Egypt has yet to pay debts by the end of this month or by the beginning of January, those debts will not be deducted from the CBE’s foreign reserves.
A total of $700m are set to be paid by the beginning of January to the “Paris Club” (an informal group of creditor nations that make up the world’s top 20 economies) and $1.5bn is due to be paid by the beginning of January to foreign oil and gas companies, Elfiqy said. He also added that a syndicated loan from banks will help finance the Egyptian General Petroleum Corporation with the $1.5bn.
The banks involved are the National Bank of Egypt (NBE), HSBC, and National Bank of Abu Dhabi (NBAD), he added.
Earlier in October, Governor of the CBE Hisham Ramez announced the payment of $500m to Qatar. Following the payment of the $2.5bn in November, the total amounts of deposits paid back to the country have reached $6bn out of a total of $6.5bn. By the second half of 2015 the remaining $500m owed to Qatar is set to be paid.
As for the installments that have been paid to the Paris Club, $700bn was paid in January 2014 followed by the same amount in July 2014. Ramez, however, did not specify the total amount of debts to be paid by Egypt to the organisation.
Oil and gas companies’ debts amount to $5.5bn, which, according to a senior official in the Ministry of Petroleum’s statement at the end of November, are set to be paid within the next six months.
© Copyright Al-Ahram Publishing House