The Finance Ministry recently offered treasury bills worth US$2.5 billion in an effort to improve cash flow and stem withdrawals from Egypt’s foreign currency reserves, an official from the ministry has said.
The bills were offered in two phases, the first of which was for $1.5 billion with a promised return of 3.87 percent. They are aimed at maintaining the country’s foreign currency reserves, which currently stand at $20 billion. The military has lent the Central Bank an additional $1 billion from its budget.
“The foreign reserve has dropped by $16 billion since February,” explained former Central Bank Governor Ismail Hassan, adding that the bills are only a temporary solution. “What we really need is to restore order, promote tourism and increase production.”
Banking expert Passent Fahmy blamed the Central Bank for failing to establish policies to preserve or increase Egypt’s foreign reserves. “The bank has squandered $16 billion just to keep the Egyptian pound strong against the dollar,” she said, “while other strong economies like in Japan and China have devalued their currencies against the dollar.” Fahmy added that the country’s remaining reserves can cover its needs for only four or five months at most.
Translated from Al-Masry Al-Youm