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Egypt foreign reserves drop dramatically

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CAIRO, Feb 5 AFP

February 06 2013, 01:52AM

Egypt's foreign reserves fell by almost 10 per cent to $US13.6 billion ($A13.10 billion) in January, the Central Bank of Egypt said in a statement on Tuesday published by the official MENA news agency.

The bank said "foreign reserves fell heavily by $1.4 billion to $13.61 billion in January, from $15 billion in December," the agency reported. The statement gave no reason for the fall.

Despite an influx of $5 billion in aid from Qatar in the form of grants and loans over the past year, the reserves have continued to drop.

MENA quoted an economics expert saying the decrease since December was partly due to Egypt paying interest on foreign loans and a drop in tourism revenues due to continuing political unrest.

The bank had also made dollars available to the government to import food and oil products, and sold dollars to banks in auctions in a controlled devaluation of the Egyptian pound.

The bank had warned last month that its reserves had reached critical levels as political turmoil forced the government to postpone subsidy cuts and finalising a deal with the IMF for $4.8 billion in aid.