Macroeconomic Forecast Egypt

Egypt's stock of foreign reserves continue to decline, with latest data showing the central bank's financial arsenal dwindling to only US$22.1mn by end-November, down 43.3% y-o-y. This represents just under five months worth of imports according to our calculations. With capital continuing to flee the economy, we stress that the central bank's ability to avoid a forced devaluation is gradually diminishing. At some point in early 2012, the government will most likely need to seek assistance from the IMF to prevent a more pronounced currency crisis in our view.

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