Egypt’s foreign reserves rise to $31.126 billion

CAIRO: Egypt’s foreign reserves jumped to $ 31.126 billion at the end of May from $ 28.641 billion at the end of April, boosted by last month’s Eurobond sale, the central bank said on Sunday.

Egypt, which has been struggling to revive its economy since a 2011 uprising, sold $ 3 billion of Eurobonds in May, twice as much as targeted.

That confirmed growing foreign appetite for the country’s debt as it follows through with economic reforms aimed at cutting a budget deficit and luring back investors.

In November, Egypt aban- doned its currency peg of 8.8 per dollar and floated the pound, which then halved in value. It also raised its key interest rates by 300- basis points, helping Egypt to clinch a $ 12 billion International Monetary Fund (IMF) program.

Last month, the central bank raised its key interest rates by another 200- basis points after inflation reached a three- decade high.

The moves helped the country lure back foreign investors to its treasury sales. Foreign investors in Egyptian government securities rose to 136 billion Egyptian pounds ($ 7.52 billion) in May from 120 billion pounds a week earlier.

Last month’s Eurobond sale, which reached Egypt’s central bank on May 31, was the second such sale this year. Egypt had earlier raised $ 4 billion at a Eurobond sale in January that also exceeded expectations.

The steady climb in Egypt’s foreign reserves since it floated the pound brings them closer to pre2011 levels of around $36 billion. Egypt is looking to ramp up petroleum production over the next two years, aiming to reduce fuel imports to about 10 percent of total consumption from 30 percent currently, media quoted Oil Minister Tarek El- Molla as saying.

Once an energy exporter, Egypt has turned into a net importer in recent years, squeezed by declining production and increasing consumption.

Egypt has been trying to reverse that trend, speeding up production of oil and gas at recent discoveries. Large natural gas finds are expected to make Cairo self- sufficient in gas by the end of 2018 and it is now looking to make similar progress in petroleum.

“The Ministry of Petroleum has put forward a plan ... to increase the country’s production of petroleum products and reduce its reliance on imports to 10 percent of total consumption by 2019,” El- Molla said in remarks published in the financial newspaper Al- Borsa on Sunday.

El- Molla said Egypt consumes 6.8 million tons of fuel per month.

The country is in talks with its liquefied natural gas ( LNG) suppliers to defer contracted shipments this year and aims to cut back on purchases in 2018, as surging domestic gas production pushes back demand for costly foreign imports.

On Saturday, the Trade Ministry issued tough new regulations on importers by sharply raising the minimum capital they need to operate. The step is part of the government’s latest effort to curb foreign- made goods and spur local manufacturing.

Under the ministry’s executive regulations, the minimum capital required for the smallest companies to register was hiked to 500,000 Egyptian pounds ( about $ 28,000) from 10,000 pounds previously. For limited companies, the minimum threshold was raised to 2 million pounds from 15,000 pounds previously.

The new regulations also raise the minimum capital required for a joint stock company to get registered to 5 million pounds. Importers will have six months in order to adjust to the reform, which was contained in an amendment to the Importers Register Law passed in March.