Egypt foreign currency reserves report sharp decline

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Egypt's economy has been going through challenging times since the ‘Arab Spring’-inspired revolution two years ago toppled the former President Hosni Mubarak.

Recent weeks have seen footage of yet more violent protests in Cairo and the cities of Port Said and Suez, which are important locations when it comes to international trade routes via the Suez Canal.

As well as having drastic effects on the all-important tourism market for the country, which is an essential way of foreign currency entering Egypt’s economy, foreign investment has dwindled, particularly when it comes to overseas buyers for both commercial and residential properties.

In a statement published by the state news agency Mena, the central bank of Egypt has announced that the country’s foreign currency reserves fell 10% in January, although it gave no reason or explanation for the figures.

The announcement said that total reserves fell by $1.4bn during January, down from $15bn to $13.6bn. Foreign currency reserves are used by the central government to pay for imports including food and fuel.

A previous announcement in December had declared that the then-total reserves of $15bn meant that they had reached critical levels and only represented a figure calculated to be enough to cover another three months of imports.

In contrast, the reserves stood at $36bn before the uprising against Hosni Mubarak and concerns are high that the state of Egypt's economy is casting a shadow over the short term future of the government.

Talks with the International Monetary Fund for a $4.8bn loan were put on hold in December amid the political turmoil which is surrounding the introduction of the proposed new constitution, although the government is still hoping to renew the talks.

The European Union is currently considering a $900m loan and the US and the African Development Bank are also looking at supplying funds.

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