Egypt’s foreign reserves have risen by about $52 million, recording $44.969 billion by the end of August 2019, compared to $44.917 billion by the end of July 2019, according to the Central Bank of Egypt (CBE).
The CBE said on its website that this amount, which is an initial estimation, is the highest ever recorded by the bank.
“Actually, Egypt’s foreign reserves are built up depending on the loans from fund corporations. They do not reflect production or investment revenues,” Basant Fahmy, a member of the Egyptian parliament’s economic affairs committee, told Ahram Online.
Fahmy projected that the reserves will drop in the upcoming period due to number of factors.
“By receiving the last tranche of a loan from the International Monetary Fund’s (IMF), Egypt will not have another major source of foreign reserves. Key sources of foreign reserves for Egypt’s banking system are tourism and the export sector, as well as the Suez Canal, but all these sources are suffering and do not provide the required revenues, especially in foreign currency,” Fahmy explained.
She added that international instability due to the US-China trade war and a looming global recession are casting a shadow over Egypt’s economy, especially for the upcoming year.
“Given the global unrest, it is not expected that Egypt will attract more tourists, in addition, the export sector will not be able to do well due to the trade war. Moreover, the global conflict will also affect the Suez Canal’s performance. For investment, foreign investors and businesspersons might, forced by this tension, suspend all investments in Egypt, especially since global companies are dominated by China, Europe, and the US,” Fahmy clarified.
Fahmy called on the government to rationalise its expenditures and work to increase Egypt’s foreign reserves by achieving economic growth rather than loans.
Foreign currency reserves reached $44.916 billion at the end of July 2019, when Egypt received that last tranche of the $12 billion IMF loan.
Foreign exchange reserves in Egypt averaged $2,5051.36 million from 2003 until 2019, reaching an all-time high of $44.969 million in August of 2019 and a record low of $13.448 million in March 2013, according to Trading Economics.