Prime Highlights:
Egypt’s net foreign assets (NFAs) rose by $2.74 billion in January, reaching $8.70 billion, up from $5.96 billion in December.
The increase is attributed to Egypt’s completion of a $2 billion dollar-denominated bond sale on January 29, its first in four years.
January’s growth follows three months of decline in late 2024, marking a positive turnaround for Egypt’s foreign assets.
Key Background:
Egypt’s net foreign assets (NFAs) experienced a significant increase of $2.74 billion in January, rising to $8.70 billion from $5.96 billion at the end of December, according to data from the central bank. This growth marks a rebound following three consecutive months of declines in late 2024.
The surge in Egypt’s NFAs appears to have been largely driven by the successful sale of $2 billion in dollar-denominated international bonds. This bond issuance, completed on January 29, marked Egypt’s first such sale in four years and was part of the country’s ongoing strategy to bolster its foreign currency reserves. The positive movement in foreign assets comes after a period of financial strain, where Egypt had relied on its NFAs to stabilize its currency.
Since September 2021, Egypt has been using net foreign assets, which include foreign holdings at both the central bank and commercial banks, to support the Egyptian pound. The country faced considerable financial pressures in late 2022, when NFAs turned negative for the first time, but they returned to positive territory in May 2024.
In December, Egypt faced substantial dollar payment obligations, including the maturity of foreign-held Egyptian pound treasury bills, nearly $1 billion in repayments to the International Monetary Fund (IMF), and payments for natural gas imports. However, despite these challenges, both central and commercial banks reported an increase in foreign assets in January, even though foreign liabilities also saw a rise. This boost in Egypt’s foreign assets reflects the effectiveness of its recent financial moves and provides a more stable outlook for the nation’s currency in the short term.
