Egypt's Central Bank in Talks for $5 Billion Deposits to Strengthen Reserves

Egypt is on the verge of securing substantial deposits from the United Arab Emirates and Saudi Arabia, aimed at reinforcing the reserves of the Central Bank and facilitating the revival of the International Monetary Fund (IMF) program inked just last year.

Sources close to the matter revealed that these negotiated deposits are anticipated to reach a substantial sum of $5 billion and will eventually be converted into long-term investments spanning over multiple years.

The Central Bank's current deposit holdings from Arab nations stand at approximately $29.9 billion, further divided into $15 billion designated for medium to long-term deposits from the Gulf region and an additional $14.9 billion allocated for short-term deposits from the Gulf and Libya.

Moreover, the sources emphasized the presence of a preliminary agreement to renew the existing deposits originating from both the United Arab Emirates and Saudi Arabia. These deposits are scheduled to mature next year.

This significant move comes at a critical juncture for Egypt as the nation grapples with a scarcity of foreign currency liquidity and a mounting pile of external obligations.

It all unfolds just a few weeks before the impending completion of the International Monetary Fund's crucial review.

Notably, the Emirati deposits within the Central Bank are estimated at a substantial $10.7 billion, divided into $5.7 billion in the long term and $5 billion in the short term.

Egypt's other key financial partners include Qatar with approximately $4 billion in deposits, Saudi Arabia contributing $10.3 billion, and Libya's holdings amounting to $900 million.

As of the close of September 2023, the Central Bank of Egypt reported an increase in the net international reserves, which now stand at an impressive $34.97 billion.

Adding to these developments, sources hinted at forthcoming debt swap agreements with multiple countries that have provided loans to Egypt.

These deals are designed to alleviate the government's external debt burden, following the model of a successful debt swap agreement previously signed with China.

The Egyptian Cabinet officially confirmed last week that Egypt and China had formalized a memorandum of understanding related to debt swap initiatives for the execution of development projects.

This memorandum's primary objective is to fortify collaboration between the two nations in the realm of debt swaps for the implementation of mutually agreed-upon development projects.

This strategy harnesses portions of Chinese debt to materialize projects that support the efforts of the Egyptian government, working in partnership with China, to foster sustainable development.

Shaimaa Raafat / Daily News Egypt