Egypt's net international reserves surge to $47.26 billion in January

According to data released by the Central Bank of Egypt, Egypt's net international reserves increased to $47.265 billion in January. This follows figures of $47.109 billion in December and $46.952 billion in November, indicating a continuous upward trend. This growth reflects improved economic stability and investor confidence in the Egyptian market.

Egypt's net international reserves have been steadily increasing since 2024. At the end of August 2024, Egypt's net international reserves reached $46.597 billion, up from $46.49 billion at the end of July. Starting in June 2024, reserves increased from $46.126 billion in May to $46.3 billion, following $41 billion and $40.4 billion in April and March, respectively. These consistent increases signal a strengthening of Egypt's financial position.

Despite the increase in international reserves, Egypt's net foreign assets decreased by $592.1 million in December, marking the third consecutive month of decline. According to Reuters calculations based on the central bank's official exchange rate, net foreign assets fell from $5.96 billion at the end of November to $5.29 billion, with a decrease of $3.25 billion in November. This decline reflects the pressures Egypt faces from various foreign currency liabilities.

Since September 2021, Egypt has been using foreign currency assets controlled by the central bank and commercial banks to stabilize the Egyptian pound. The use of these resources turned negative in February 2022, before turning positive again in May 2024. In December, the Egyptian currency faced significant pressure due to substantial external debt. According to bankers, intermediaries, and analysts, these debts include repayments to foreign investors for Egyptian pound-denominated treasury bills, repayment of approximately $1 billion in International Monetary Fund loans, and payments for natural gas imports.

Egypt's non-oil private sector experienced growth in January, achieving its best performance in over four years and its first expansion since August, according to a recent business survey. Standard & Poor's Global Purchasing Managers' Index (PMI) rose from 48.1 in December to 50.7 in January, indicating improved health in the sector at the beginning of 2025. A PMI reading above 50.0 indicates growth, while a reading below 50.0 indicates contraction.

The January reading was the highest since November 2020, benefiting from improved domestic market conditions and easing cost pressures, which boosted sales growth. However, uncertainty about the sustainability of this upward trend dampened business expectations and hiring. The output sub-index rose from 47.1 in December to 51.1 in January, and the new orders sub-index rose from 46.4 to 51.3. Despite the optimistic start to the year, businesses remained cautious in forecasting future business activity, with expectations falling to near-record lows. The labor market stopped declining after two months of layoffs, but companies did not expand their workforce. The future output expectations sub-index was 52.8 in January, down from 53.8 in December.

The rate of cost increases fell to its lowest level in nearly eight months. The slight increase in product prices was the first in four and a half years. Buyer spending in the construction sector declined, and the increase in procurement costs was lower than in December compared to other market sectors. This indicates a potential shift in the dynamics of the construction industry.