The Clap:
Egypt experienced a surplus in its net foreign assets for the first time in more than two years.
A first since February 2022:
Egypt’s net foreign assets became positive for the first time since February 2022, with the surplus increasing to almost USD 14.3 billion in May from a deficit of USD 3.7 billion in April, Bloomberg reports.
Remember:
Egypt’s net foreign asset (NFA) deficit contracted by USD 586 million in April, marking the third consecutive month of decline, according to data by the Central Bank of Egypt.
For the CBE:
The Central Bank of Egypt had a surplus of USD 9.7 billion net foreign assets, a significant increase from the USD 763 milion deficit in April. Meanwhile foreign liabilities decreased by USD 5.6 billion, Enterprise notes.
Commercial banks shifted from having a deficit to having a surplus in their net foreign assets, with a surplus of USD 4.6 billion in May compared to a deficit of USD 2.9 billion in April. During the same period, commercial banks witnessed an increase of USD 6.9 billion in their foreign assets, as their foreign liabilities decreased by USD 625 million, according to numbers crunched by the news outlet.
For the banking sector:
“Net foreign assets of Egypt’s banking system have improved by a staggering USD 43 billion since January. International support likely played a role, especially the USD 35-billion mega investment from the UAE. But the scale also suggests portfolio inflows are back.” Bloomberg Chief Emerging-Markets Economist Ziad Daoud said.
Analyst’s take:
This was expected after the USD 35-billion Ras El-Hekma deal, which included an injection of USD 24 billion in fresh cash flows and USD 11 billion in deposits held with the Central Bank of Egypt. This reduces the banking system’s exposure to foreigners, which alleviates pressure on the Egyptian pound and helps reduce the backlog of goods held at ports as well as the payment of dues to international oil companies, “ Amr Elalfy explained.
