CAIRO: Egypt’s reported slip in net international reserves to $16.3 billion at September-end, down from $18.1 billion a month earlier, is “credit negative,” global credit rating agency Moody’s Investors stated in a Monday report.
September data showed that Egypt’s foreign reserves continued to dip for three consecutive months since June, after a boost from Gulf countries deposit inflows in April.
“The drop reflects continued dependence of Egypt’s balance of payments on external donor support, which is credit negative for the country’s external liquidity position,” Moody’s stated.
Egypt’s Gulf allies promised a total of $12.5 billion in aid and investments to Cairo during the three-day economic summit held in Sharm el-Sheikh March 13-15.
At April- end, the reserves had surged to $20.5 billion upon receiving $6 billion worth of deposits from Saudi Arabia, Kuwait and United Arab Emirates (UAE) in April 2015.
Egypt’s foreign reserves saw a severe shortfall over the past four years as tourism revenues and foreign direct investments tumbled over political turmoil following the January 25 Revolution which toppled Former Minister Hosni Mubarak in 2011, when they were valued at $35.8 billion.
The foreign reserve allows the government to purchase basic commodities, such as wheat and petroleum products, and to pay off premiums and interest on foreign debts.