As we expected, the new SDRs allocation reflected in NIR and widened Egypt’s policy space needed to alleviate external pressures: Egypt’s Net Official Reserves (NIR) edged up by USD63mn, standing at USD40.67bn by end of August (+6% y/y), despite the notable decline in the stock of foreign currency, thanks to USD2.8bn of SDR new allocation received from the IMF. Foreign currency in NIR fell by USD2.55bn (-7% m/m) to USD33.59bn, the lowest level since September 2020, while the holdings of SDR increased by USD2.26bn to stand at USD2.46bn by end of August. This means that the monetary authority has moved significantly through the space provided by the newly-allocated SDRs to boost its reserve buffers and to finance external obligations that may include debt repayment or forward transactions.
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Mona Bedeir
Chief Economist
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