Egypt’s net foreign assets dropped by 9.6% to $9.1 billion in October, according to data from the Central Bank
Egypt’s net foreign assets (NFAs) dropped by 9.6% from September to October, reaching $9.1 billion (EGP 485.8 billion). This decline reversed the small improvement seen in September, based on central bank data.
Foreign assets drop
- Net Foreign Assets (NFAs), which are the difference between the foreign assets and liabilities of Egypt’s Central Bank (CBE) and commercial banks, fell from $10.1 billion last month, according to new data. This drop in October followed an increase of $513.1 million in September.
- Egypt has relied heavily on its NFAs since September 2021 to help stabilize its currency due to economic challenges both from outside the country and within.
- NFAs turned negative in February 2022 as Egypt faced serious financial problems but improved to positive in May 2024, offering a brief period of relief.
- October data showed that foreign assets at the central bank increased to $44.8 billion, while commercial banks’ foreign assets dropped to $27.4 billion. At the same time, foreign liabilities at the central bank rose to $63.2 billion and to $28.8 billion at commercial banks, leading to the overall decline in NFAs.
- Egypt continues to face pressure to meet its external debt and ensure enough foreign currency, as part of its efforts to stabilize the economy.
Inflation Increases
Egypt’s annual inflation for urban consumers rose to 26.5% in October, slightly higher than 26.4% in September, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). This was the third month in a row that inflation increased.
The rise in inflation was mainly due to a 27.3% increase in food and drink prices, which make up the largest part of the inflation rate. Fuel prices also went up by 9.2% in October, marking the third increase this year. This was due to the government reducing subsidies.
The ongoing rise in inflation has made experts believe that the Central Bank of Egypt (CBE) will not lower interest rates soon. They expect any rate cuts to happen only in early 2025. The CBE kept interest rates unchanged in October, taking a cautious approach as inflation continued to rise.
Big Number
Egypt’s net international reserves increased slightly to $46.9 billion at the end of October, up from $46.7 billion in September, according to data from the Central Bank of Egypt (CBE).
Rating
The rating agency Fitch raised Egypt’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B’ from ‘B-‘ with a stable outlook last month. This upgrade was based on stronger external finances, supported by foreign investments in Ras Al Hekma, higher international reserves, new capital inflows, and a more flexible exchange rate.
Published: 3rd December 2024
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