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$6.3bn OIL ARREARS

Egypt's forex reserves dip to $17.8bn in Nov

Cairo, December 9, 2013

Egypt's foreign exchange reserves fell to $17.8 billion in November from $18.6 billion in October, the central bank said, their lowest level since an inflow of funds from Gulf states after the July 3 ouster of Islamist President Mohamed Mursi.

The reserves stood at $15 billion in November last year. Egypt's foreign exchange reserves, which stood at $36 billion on the eve of the 2011 uprising against former President Hosni Mubarak, have been hit by political turmoil since his downfall.

Egypt returned a $500 million deposit to Qatar in November after Qatar refused to renew it at its maturity. Qatar had deposited the funds with the central bank in late 2012.

Relations between the two countries deteriorated after the army ousted Islamist President Mohamed Mursi in July following mass protests against his rule. Qatar had been a firm backer of Mursi's Muslim Brotherhood and lent or gave Egypt $7.5 billion during the year he was in power.

"It's related to the repaying of the Qatari funds and possibly the settlement of dues to oil companies. The combined effect of both probably added to the drop," said Hany Genena, head of research at financial group Pharos Holding.

The Egyptian government plans to pay $1.5 billion in arrears to foreign oil companies "in days", Oil Minister Sherif Ismail said last week. It also agreed a timetable to pay $3 billion of the $6.3 billion it says it owes those companies.

"We expect another drop in December because of the announced repayment of funds to foreign oil companies, coupled with continued weakness in tourism revenues," Genena said.-Reuters




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