The Central Bank of Egypt (CBE) could be receiving a fresh injection of deposits from the UAE and Saudi Arabia to support its foreign currency reserves, explained unnamed sources to local media yesterday. This backs up a similar story, also citing sources, that was released by other local media outlets last week.

According to reports, the CBE is close to getting around $5 billion and is expected to be converted into investments over several years.

Currently, there is a preliminary agreement in place which includes the renewal of existing deposits provided by the two Gulf countries that are set to expire next year, the sources explained.

In the past few years, neighboring Gulf countries have provided fresh funds to the CBE’s reserves, with the total volume of Gulf deposits to the central bank reaching around $29.9 billion. In a September release, the CBE reported foreign currency reserves at $34.97 billion.

So far, deposits from the UAE in the CBE were recorded at $10.7 billion - distributed between $5.7 billion long-term and $5 billion short-term - while Saudi Arabia has deposited $10.3 billion.

The fresh funds would support Egypt’s efforts in acquiring additional hard currency as it faces an FX shortage and looks for ways to reduce its external debt burdens.

Some of Egypt’s initiatives to bolster its reserves were a debt swap agreement signed with China last week, as well as a bilateral currency exchange agreement with the UAE and a debt swap with Germany worth €54 million in September.

The sources also told local media that there are several debt swap agreements on the horizon.