The Central Bank of Egypt (CBE) turned to profitability in the past fiscal year, for the first time in seven years, recording profits of EGP22.834 billion, compared to losses of EGP86.28 billion in the previous fiscal year, according to the bank's financial statements and the audit report published on its website. The Central Bank's gold balance grew by 90.6 percent during the past fiscal year, recording EG 454.92 billion.

The fiscal year in Egypt begins on July 1 and ends at the end of June of the following year.

In November 2022, the CBE stopped supporting the return rate on five initiatives, namely: real estate financing initiatives for low- and middle-income people, industry, tourism, and converting cars to dual-fuel operation - i.e. from gasoline and gas to "clean fuel". Support for the initiatives was transferred to the Ministry of Finance, a decision made by Prime Minister Mostafa Madbouly. His decision came after the CBE incurred huge losses from supporting these initiatives. It also came in response to a request from the International Monetary Fund (IMF) according to the economic reform program.

Reducing the debt of government agencies

The IMF said that government agencies in Egypt would reduce their debt to the CBE by EGP100 billion each fiscal year until it reaches zero. This is likely to be positively reflected in the bank's upcoming budget

The IMF also said in its report entitled "Egyptian Economic Review" that government agencies have already paid claims to the CBE amounting to EGP150 billion by the end of last July.

The CBE explained that total assets increased by 35 percent to about EGP 6.1 trillion during the past fiscal year compared to about EGP4.5 trillion during the same period the previous year, according to the report. The CBE's gold balance also grew by 90.6 percent during the last fiscal year ending in June 2023, reaching EGP454.92 billion from about EGP238.6 billion by the end of June 2023.

The CBE last achieved profits during the fiscal year 2016-2017. Profits increased to EGP12.66 billion, before falling onto loss.

Net foreign assets in banks rise 1.7 percent to USD13.3 billion

The surplus of net foreign assets in the Egyptian banking sector - including the CBE - rose in July by 1.7 percent on a monthly basis, to USD13.261 billion compared to USD13.03 billion in June, according to CBE data. This increase comes after it decreased last June, by 8.7 percent on a monthly basis.

The deficit of net foreign assets in Egyptian banks turned into a surplus for the first time in 28 months in May, recording USD14.3 billion after the total deficit worsened to about USD28 billion in January.

Banks' foreign assets are their deposits and savings in foreign currency and are liquid at times when the bank needs liquidity to meet its obligations.

The CBE's data attributed the increase in the total net foreign assets in the country's banking sector to the rise in the net foreign assets of the CBE, mainly in July, by 1.7 percent, recording USD10.46 billion, compared to USD 10.285 billion in June.

The net foreign assets of Egyptian commercial banks also increased in July by about 1.8 percent on a monthly basis, to USD 2.799 billion from USD 2.747 billion in June.

The recovery of the net foreign assets of Egyptian banks was linked to the economic reforms last March, including the liberalisation of the exchange rate and the return of hot money again - indirect foreign investment in local debt instruments - and the inflow of foreign exchange resources from the Ras Al-Hikma City deal, in cooperation with the UAE.

CBE data revealed that Egypt attracted about USD24 billion in indirect foreign investment during the first three months of the pound's exchange rate liberalization, bringing the size of the portfolio of these investments to an unprecedented figure of USD37.45 billion at the end of May 2024.

Photo: The Central Bank of Egypt returns to profitability for the first time in seven years. (by Adobe)