Foreignreserves in Egypt surged in March following approval of an International Monetary Fund (IMF) review
EGYPT PO SHOT: Egypt's net foreign assets skyrocketed by a whopping $4.9 billion in March, as per recent central bank data. This substantial spike appears to be thanks to the successful approval of the fourth review of Egypt's IMF program.
Net foreign assets shot up from $10.18 billion at the end of February to a hefty $15.08 billion in March. Reuters figures based on official central bank currency exchange rates gave us this juicy info.
The IMF gave its seal of approval for Egypt in early March, releasing a cool $1.2 billion after the review of its $8 billion economic reform program. They also approved a $1.3 billion arrangement under the IMF’s resilience and sustainability facility.
Foreign investors were all over Egyptian pound treasury bills after the approval, especially with maturing one-year bills from the March 2024 IMF agreement. Two bankers spilled the beans on this.
Egypt's turned to foreign assets (held by both central bank and commercial banks) since September 2021 to support theirCurrency. Net foreign assets took a dive in February 2022, but sprang back to the positive zone in May last year.
Foreign assets saw an uptick in both the central bank and commercial banks in February, while the central bank's foreign liabilities rose but commercial banks' declined.
Long-story-short, recent foreign investment inflows – around $4 billion alone – into Egypt's government debt markets, particularly the secondary market, powered the net foreign assets surge. The IMF’s validation of Egypt's economic reform program significantly boosted investor confidence, adding fuel to the foreign inflows that bolstered the currency and overall economic stability.
This tale shows us that IMF approval of economic reforms can kickstart foreign investments, resulting in increased net foreign assets for countries like Egypt.
- The recent surge in Egypt's net foreign assets can be attributed to foreign investments, particularly in the government debt markets, bolstered by the IMF's validation of Egypt's economic reform program.
- The uptick in Egypt's net foreign assets, which saw an inflow of approximately $4 billion, is a testament to how financing from foreign sources, often sparked by IMF approval of economic reforms, can enhance a country's financial stability and education-and-self-development prospects.
