Egypt Net Foreign Asset Deficit Drops in July

Egypt Net Foreign Asset Deficit Drops in July

Egypt's net foreign assets deficit narrowed by $808 million in July to a negative $26.2 billion, its first decline since March, revealed the central bank.

Over the past three years, public finances in Egypt have been subjected to tremendous pressure, given a persistent shortage of foreign currency and sharp increase in the money supply.

The central bank has fixed the official exchange rate for the Egyptian pound at about 30.90 against the dollar since early March. It has risen 15-20 percent in the parallel market.

Net foreign assets rise and fall when banks increase or decrease their borrowing from abroad. Almost all the July improvement was due to increased net foreign assets at commercial banks.

Egypt's official foreign currency reserves have been rising in small increments since October 2022, and the cash reserve for August is expected to be announced before the end of this week.

In September 2021, before the decline began, net foreign assets recorded a positive $8 billion.

Egypt's M1 money supply, which includes currency in circulation and local currency demand deposits, recorded an annual increase of 33.1 percent to the end of July, down from a yearly rise of 33.4 percent in June.

M2 money supply, which includes local currency time, savings, and