May 5, 2011 / 2:19 PM / in 7 years

Egypt's foreign reserves fall to lowest in 4 years

CAIRO (Reuters) - Egypt’s net foreign reserves fell to their lowest in four years in April, reaching $28.02 billion, as the economy of the Arab world’s most populous state stumbles after a popular uprising unseated its president.

<p>One Euro coins are pictured after being minted at the Austrian national mint in Vienna April 8, 2009. REUTERS/Leonhard Foeger</p>

The unrest that began on January 25 chased away tourists and foreign investors and crimped exports, among Egypt’s main sources of foreign exchange.

Egypt drew down foreign reserves by almost $6 billion in the first three months of this year to $30.1 billion at the end of March. Unofficial reserves fell $7 billion.

Foreign reserves fell by another $2 billion during April, a 19 percent decline from a year earlier and 6.9 percent from March 2011. Analysts expect the drop to continue.

Investment bank Beltone Financial wrote in a note it expected net international reserves to fall to $26 billion by the end of June.

“The continued deterioration in net international reserves reflects the fall of $2 billion in foreign currency reserves,” Beltone said.

Foreign currency reserves were $24.5 billion by the end of April.

Credit Agricole analysts said: “FX reserves could reach about $20 billion at the end of 2011 should financial pressure remain significant. This is about four to five months of imports, which is neither comfortable nor acutely alarming”.

Egypt’s Finance Minister Samir Radwan said last month the balance of payments was losing $3 billion every month, while tourism sheds $1 billion.

Egypt has said it is seeking $10 billion in funding from international lenders and rich nations to help it cope with the fallout from the mass protests that toppled Mubarak.

The country’s economy contracted an estimated 7 percent in January-March and the International Monetary Fund is projecting growth of 1.0 percent this year, well below its long-term average, after a 5.1 percent expansion in 2010.

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