On Monday, the Central Bank of Egypt reported the net foreign assets deficit increased by about 5% every month to reach negative $19.7 billion. According to Asharq Business, net foreign assets started declining in October 2021 and then turned negative in February 2022. “The worsening of the net foreign asset deficit was in line with expectations, given the slowdown in import operations, the stability of net foreign reserves, and the rise in outstanding debts,” said Allen Sandeep, Head of Research at Naeem Holding.
Hany Genena, a lecturer at the American University in Cairo, said that the worsening would continue, explaining that it is caused by the exit of foreign investors from the Egyptian debt markets and the persistence of the current account deficit. A financial analyst, who declined to be named, said that the worsening deficit in foreign assets means the continued exit of foreign exchange from Egypt, albeit at a slower pace, due to the decline in obligations and increased investments. Central Bank data showed that Egyptian banks’ foreign currency commitments increased by 7% every month, to EGP 523.7 billion, while their foreign currency assets declined by 2%, to about EGP 292.5 billion.