Mounting External Vulnerabilities
The EGP depreciation of March was unavoidable, and NIR figures were just the tip of iceberg. Egypt's net international reserves (NIR) fell for the first time in almost two years by USD3.9bn to USD37.1bn by end of March. The fall came to reveal the sizeable pressures on the country’s external balance, prompting the monetary authority to deploy c.91% of its SDR stock in NIR. The country's existing SDR stock as of March 2022 is close to where it was before the IMF's latest SDR allocation in August. Furthermore, the stock of foreign currency declined by USD1.0bn to USD29.1bn, the lowest level since June 2017. However, the stock of gold remained at a high record of USD7.8bn, up from USD6.9bn, driven by higher prices by end of March 2022. Despite the drop, NIR still covers more than five months of imports.
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Mona Bedeir
Chief Economist
T +202 3300 5722