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Monday, 1 November 2021

Saudi deposits USD 3 bn at CBE to shore up Egypt’s foreign reserves

Saudi Arabia has provided Egypt with USD 3 bn to help it overcome the effects of the pandemic and shore up its foreign reserves. The kingdom deposited the new funds at the Central Bank of Egypt and has extended the maturity of USD 2.3 bn worth of existing deposits, the kingdom’s finance ministry said in a statement yesterday.

Egypt has recovered around half of the reserves it spent during the height of the covid market panic last year: The country’s stockpile has gradually inched up this year, reaching USD 40.8 bn in September after having fallen almost USD 10 bn between March and May last year to USD 36 bn. The Saudi funds will put us a lot closer reaching the pre-pandemic peak of USD 45.5 bn.

Riyadh has given us significant financial support over the past eight years: Saudi provided the country with USD 5 bn immediately after President Abdel Fattah El Sisi came to power in 2013, including a USD 2 bn central bank deposit. Riyadh had USD 5.5 bn in long-term deposits at the CBE as of the end of March, according to central bank data cited by Reuters.

Pakistan also got fresh funding: The statement said that the kingdom has deposited USD 3 bn with Pakistan’s central bank and handed the government USD 1.2 bn in trade finance to ease the pressure on its balance of payments. The Saudi Fund for Development said last week that the USD 1.2 bn would be used to pay for imports of petroleum products.

The deposits come (indirectly) courtesy of the IMF: Riyadh is deploying around 70% of its latest SDR allocation from the IMF to provide the boost to Egypt and Pakistan.

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