Central Bank of Egypt issues foreign reserves warning

Central Bank's statement discusses impact of political instability The Central Bank of Egypt (CBE) has warned that the current level of foreign exchange has reached a minimum and critical level. In a statement, the bank said that the exchange level must be maintained to fulfill the basic needs of Egypt, such as managing the foreign debt in order to preserve the reputation of Egypt in the global financial markets, and to cover the cost of imports of strategic commodities, to meet the basic needs of the citizens.
Meanwhile, CBE has called on Egyptian people, and all the economic sectors to make efforts to rationalise the use of the foreign exchange, and promote the national industries to avoid any kind of speculation which will negatively affect the economy, and harm the interests of citizens.
In a statement, the CBE pointed out that the Egyptian economy has faced many serious challenges since the start of the year as a result of the extension of the transitional period, accompanied political instability and loss of security, which impacted negatively on all economic indicators.
The statement pointed out that the most important of those challenges was the negative impact on foreign exchange resources, due to the decline in the income of the tourism sector by about 30%, a total decline in foreign direct investments during the past two years, and the full decline of the foreign investments in debt securities.
The high risks surrounding the Egyptian economy meant Egypt's credit rating was cut five times. This resulted in a shift in the balance of payments, after its surplus amounted to about $3.1bn at the end of 2010 to a deficit of around $6.21bn, over last year-and-a-half.