The Central Bank of Egypt (CBE) has announced a significant decrease in the country’s net foreign assets (NFA) deficit for March, marking its lowest level in over two years. Egypt’s net foreign assets declined to EGP65.38 billion ($1.36 billion) by the end of March compared to EGP270.65 billion in February. This also marks a significant decline from EGP352.49 billion in January. The central bank attributes this decline to key transactions in property development and the implementation of currency reforms.
Ras El Hikma deal propels growth
In February, Egypt secured $5 billion, and an additional $5 billion in early March through the sale of development rights for Ras El Hikma. Those transactions, which are part of a larger deal amounting to $35 billion, significantly contributed to the decline in the net foreign assets deficit.
Read: Inflation in Oman up 0.2 percent in March on rising food prices
Impact of currency flotation
As part of its loan agreement with the International Monetary Fund (IMF), Egypt implemented currency reforms. This resulted in the depreciation of the Egyptian pound. The Egyptian pound now stands at EGP48.36 for each U.S. dollar. This move aims to encourage foreign investment in local treasuries and increase remittances to Egypt.
In March 2022, the central bank’s net foreign assets recorded a deficit of EGP93.39 billion. This contrasts with a surplus of EGP134.35 billion it recorded in February 2022. The volatility was partly attributed to the Russia-Ukraine conflict, which prompted foreign investors to withdraw funds from Egypt.
Egypt’s international reserves witnessed a notable increase, reaching $40.361 billion by the end of March 2024, compared to $35.311 billion in February. This rise, totaling $5.05 billion, underscores the country’s efforts to strengthen its financial position and enhance investor confidence.
For more news on the economy, click here.
