CBE awaits first segment of World Bank loan to support foreign reserves

Foreign reserves are facing major challenges by the beginning of 2016; repaying installments of foreign debts, covering local demand for dollars

The Central Bank of Egypt (CBE) is awaiting the first segment of the World Bank's loan, valued at $1bn. The loan aims to support foreign reserves at the CBE.
The CBE received the first segment of $500m from the African Development Bank (AfDB) loan Thursday.
Over December 2015, Egypt acquired the approval of the World Bank and the AfDB on two loans, at a total of $4.5bn, $3bn from WB and $1.5bn from AFDB. The two loans are expected to be received over three years.
Earlier in January, CBE Governor Tarek Amer explained that the transfer of the first segment of the World Bank loan may take some time.
Egyptian foreign reserves require dollarised liquidity as an urgent support for the reserves with the beginning of a new year. The reserves are facing major challenges during 2016 particularly in January including repaying installments of foreign debts and covering the local demand for dollars.
Over January, the CBE is repaying 2016's first installment of the Paris Club debts, amounting to approximately $700m. It also decided to repay the dues of dollar bonds, which were previously earlier by Qatar, a total of $1bn.
The CBE offers approximately $475m monthly for banks to cover their customers' dollar needs through FX-Auctions. CBE launched these auctions to sell dollars three times per week, as well as pumping dollars through exceptional auctions.
During a press conference held by the CBE in mid-December 2015, Amer revealed that the bank pumped $8.3bn from 29 October to 12 December only. This came with the aim of repaying importers' debt installments, providing liquidity to import new commodities, releasing bounded goods, and finalising foreign investors' dues at the Egyptian Stock Exchange (EGX) and in governmental securities.
Amer said although the CBE is paying these obligations, it is still committed to maintaining foreign reserves to cover the cost of importing commodities to Egypt for at least three months.
Egypt's foreign reserves ended 2015 with a slight increase, recording $16.445bn in December 2015 compared to $16.422bn recorded in November 2015, marking a $23m increase.
In a statement on its website, the CBE explained that this increase in foreign reserves is due to the increase of special drawing rights (SDRs) from $1.144bn in November compared to $1.161bn in December.
The value of foreign currencies included in the reserves increased by approximately $11bn to $13.041bn by the end of 2015.
Meanwhile, the value of gold stocks included in the reserves decreased by $2m, registering $2.211bn by the end of December 2015. The International Monetary Fund (IMF) loans, which are included in the reserves, also declined by approximately $3m to record $55m by the end of 2015.
The foreign reserves witnessed severe turbulences during 2015,starting with $15.452bn at the beginning of that year.
In April 2015, the reserves jumped to approximately $20.5bn, reinforced by deposits from Saudi Arabia, Kuwait, and the UAE, worth $6bn. These deposits were promised during the Egypt Economic Development Conference (EEDC) held in Sharm El-Sheikh in March 2015.
Throughout 2015, foreign reserves achieved their second highest levels in June when they recorded approximately $20.104bn. Afterwards, the reserves continuously decreased to reach $16.415bn in October and started slightly increasing again during November and December.
According to the CBE's data, the foreign reserves are currently $13.041bn in liquidity, $2.211bn in gold, $1.161bn in SDRs, and $55m in loans from the IMF.