Cairo, AP—Egypt’s net foreign currency reserves fell by around 825 million US dollars in November, the country’s central bank reported on Sunday, the sharpest drop since a large injection of aid from Gulf countries five months ago.
The Central Bank of Egypt reported the foreign currency reserves stood at 17.76 billion dollars by the end of last month. It was the third successive fall since July, when Egypt received major Gulf aid pledges, boosting state coffers to 18.8 billion dollars—their highest level in almost two years.
Mohamed Abu Basha, an economist with Egypt’s largest investment bank EFG-Hermes, said a Qatari deposit of 500 million dollars had expired and the Gulf state didn’t want to extend it, causing the sharp drop in reserves in November.
Qatar was the main backer of the country’s Islamist President Mohammed Mursi, ousted in a popularly-backed coup in July. Qatar had propped up the economy with some 8 billion dollars in aid during Mursi’s one year in office.
Following his ouster, Egypt’s reserves were boosted after Saudi Arabia, the United Arab Emirates and Kuwait pledged a total of 12 billion dollars in a mix of grants and cash deposits. These Gulf countries were at odds with Mursi and his Muslim Brotherhood group.
Abu Basha said another Qatari deposit is due to expire next month, and will likely cause a similar drop in foreign reserves.
“The whole external position is based on foreign support” from the Gulf countries, said Abu Basha. “That is what is keeping us comfortable…and you know it will keep coming.”
Another 5 billion dollars is pledged from Saudi Arabia, Kuwait and Emirates, he said, but it is not clear when it will be delivered.
In June, reserves stood at just 14.9 billion dollars, less than half of what they were before the political upheaval that hit the country following the uprising against longtime autocrat Hosni Mubarak in 2011. Since then, deteriorating security and political instability have scared away foreign investors and tourists—hurting major foreign currency earners.
The current government has also promised to pay foreign oil companies 1.5 billion dollars, nearly a quarter of the arrears it owes them, by the end of the fiscal year 2013-2014. It is not clear how much of the sum will come from the Central Bank. Government officials said they will likely begin paying them this month.