Foreign reserves rise on one-off items

Egypt’s foreign reserves increased by $705 million in August after a fall in July, but economists said the figures were flattered by one-off items that masked a continuing drain on the country’s finances.

Net international reserves rose to $15.13 billion at the end of August from $14.42 billion at the end of July, the central bank said on its website on Sunday.

The reserves were boosted in August by a $500 million deposit the central bank received from Qatar and by the central bank’s sale of 513 million euros' ($642 million) worth of euro-denominated T-bills.
“Fundamentally, if you exclude these one-offs, reserves actually fell by $437 million,” said a Cairo-based economist, who asked that his name not be used because the issue was sensitive. Other economists outside of Egypt voiced similar concerns.

Egypt has used up more than half its reserves to prevent its currency from weakening since last year’s popular uprising scared away tourists and investors, two of Egypt’s chief sources of foreign currency.

Economists say the continued drawdown is unsustainable, and that long-term reforms are needed to plug twin deficits in the country's budget and balance of payments.