KEY POINTS
- Egypt’s NFA surplus reached $5.95 billion in November, continuing its recovery since turning positive in May 2024.
- Total foreign assets dropped to EGP 3.325 trillion, while liabilities declined to EGP 3.029 trillion in November.
- Foreign reserves grew to $36.436 billion, despite decreases in gold holdings and Special Drawing Rights.
Egypt’s banking sector recorded a net foreign asset (NFA) surplus of $5.95 billion (EGP 295.6 billion) in November 2024, down from $9.2 billion (EGP 450.861 billion) in October, the Central Bank of Egypt (CBE) disclosed.
This development underscores sustained recovery in the sector, with NFA turning positive in May 2024 for the first time since January 2022, following an April deficit of EGP 174.385 billion.
The CBE’s data revealed a contraction in total foreign assets within the banking system, which fell to EGP 3.325 trillion by November’s end, compared to EGP 3.584 trillion in October. Correspondingly, liabilities decreased to EGP 3.029 trillion from EGP 3.133 trillion over the same period.
Reserves show incremental growth
According to DailyNewsEgypt, the CBE highlighted an increase in foreign currency reserves, which reached $36.436 billion in December 2024, up from $36.140 billion in November, reflecting a gain of $296 million.
Net international reserves (NIR) also rose marginally, hitting $47.109 billion in December, an increase of $157 million from the previous month’s $46.952 billion.
However, other components of Egypt’s foreign reserves faced declines. The value of gold holdings fell to $10.644 billion in December, down from $10.777 billion in November. Additionally, Special Drawing Rights (SDRs) slipped to $31 million from $37 million.
Currency composition and reserve strategy
Egypt’s foreign reserves are diversified across a basket of major international currencies, including the US dollar, euro, British pound, Japanese yen, and Chinese yuan.
The CBE periodically adjusts the distribution of these currencies based on exchange rate stability and other economic factors.
Foreign exchange reserves serve critical purposes, including financing the import of essential goods, servicing external debt obligations, and stabilizing the economy during crises or downturns in key revenue-generating sectors like tourism, remittances, and Suez Canal revenues.
Path to recovery
The November surplus marks a continuation of the banking sector’s recovery trajectory, aided by structural reforms and the government’s focus on bolstering foreign reserves.
Despite the decline in NFA surplus in October, the sustained positive trend since May reflects improvements in Egypt’s external position and fiscal policies.
With an increase in foreign currency reserves and ongoing efforts to manage liabilities, Egypt’s banking system is better positioned to navigate external challenges.
Still, the drop in gold reserves and SDRs underscores the need for continued vigilance amid global economic uncertainties.
