(3 Minutes Read)
Egypt recorded its first net foreign asset (NFAs) surplus in over 2 years in May, reporting USD 14.3 billion surplus after April’s deficit of USD 3.7 billion, according to recent figures from the Central Bank of Egypt (CBE). This was mostly driven by the CBE’s NFAs which surged to a surplus of USD 9.7 billion in May, up from a deficit of USD 763 million just a month earlier.
Commercial banks saw their net foreign assets climb to a surplus of USD 4.6 billion, a significant growth from the USD 2.9 billion deficit recorded in April. The country’s USD 14.2 billion net foreign asset surplus highlights the country’s rapid recovery from previous deficits, which almost reached a high of USD 30 billion earlier this year, exacerbated by external economic challenges.
The turnaround can be largely attributed to the substantial influx of foreign funds as Egypt received the second and final tranche of the Ras El Hikma agreement. The influx of portfolio inflows and international investments, particularly the USD 35 billion mega-investment from the UAE, has played a pivotal role in this resurgence.
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Egypt’s net foreign liabilities hit a record high earlier this year, amounting to USD 29 billion in January, however, with strategic economic measures including the float of the Egyptian pound and agreements like Ras El Hikma, the government has been able to steadily reduce liabilities.NFAs have been in the red since February 2022, after the Russian/Ukraine war triggered USD 20 billion worth of capital outflows as foreign investors pulled out amid concerns of local and global economic stability.
