Egypt Foreign Reserves at Record Before Bond Sale

Egypt’s foreign-currency reserves climbed to a record in January just as as the government prepares to raise as much as $5 billion from an international bond sale.

Reserves rose $1.2 billion, the most since July, to $38.2 billion, central bank data showed on Sunday without offering an explanation for the increase. Central bank officials weren’t immediately available for comment.

The increase may aid Egypt’s efforts to tap global debt markets this month as policy makers seek to reduce borrowing costs. The data is the latest sign that Egypt has turned the page on a dollar shortage that squeezed the economy before authorities abandoned most currency restrictions and cut subsidies to secure a $12 billion loan accord with the International Monetary Fund.

The surge in reserves since November 2016 was coupled with growth in Egypt’s external debt, as the country borrowed from international bond markets, friendly nations and international financial institutions. Officials have pointed to the rebound in tourism revenue, remittances from Egyptians abroad and a decline in the trade deficit to signal that economic reforms are bearing fruit.

“The steady increase in reserves is a strong sign the economy is able to accumulate excess dollars, even if it is funded to a large extent by external borrowing,” said Hany Farahat, a senior economist at Cairo-based CI Capital Holding.

The fact that reserves have not fallen “even once since November 2016 supports that view, that a stronger balance of payment is allowing the economy to cover its foreign currency needs,” he said.