Egypt’s net international reserves continued their relatively stable status, increasing slightly by $87m to reach $42.61bn in March, up from $42.52bn a month earlier, and maintaining imports coverage at eight months worth of imports, according to a research note from Beltone Research.
The note specified that such a slight increase is the result of the absence of any additional external financial inflows in March and only reflects the improved performance of Egypt’s balance of payments, which continued running a surplus of $5.6bn in the first half (H1) of fiscal year (FY) 2017/18.
Moreover, Egypt’s reserves currently approached the upper bound of the International Monetary Fund (IMF)’s reserve adequacy range—sufficient to reduce the likelihood of balance of payments crises and helps preserve economic and financial stability against pressures on exchange rates and disorderly market conditions—which deems necessary solidifying investors’ confidence, according to the IMF’s second review report.
The note forecasted that the reserves build-up is to maintain its solid performance in FY 2017/18 despite the peak in fixed income inflows. Accordingly, Beltone expects Egypt’s reserves to reach $45.2bn, covering 8.8 months of imports.
According to the research note, the planned $7bn eurobond issuance in FY 2017/18, taking into consideration the $4bn already issued, will counterbalance normalising fixed income inflows, in addition to maintaining the financial support agreements.