Increase in Egypt’s FX reserves unlikely to be sustained

The increase in Egypt’s foreign currency reserves in April is good news but it is unlikely to last. The fact is that last month’s rise is very small. What’s more, it is largely due to a one-off payment from Iraq and seasonal factors boosting tourism revenues. The upshot is that this is unlikely to be sustained and external funding from the IMF is still needed if Egypt is to avoid a full-blown balance of payments crisis.