Egypt’s Net International Reserves (NIR) jumped by USD2.1bn in January rising for the third consecutive month to USD26.4bn. The rise was driven mostly by an increase in foreign currency reserves, with value of gold holdings rising by only USD0.1bn. Merchandise import cover improved further to 5.6 months, with total import cover up to 4.8 months. It remains unclear whether the USD4bn proceeds from the latest Eurobond issuance was included in this month’s numbers or not; CBE Governor stated on 1 February that the proceeds have been received, but did not clarify exactly when. There is a good chance that the proceeds have been included, in our view, as January saw a USD0.7bn debt repayment to Paris Club and did not witness any major inflows. Moreover, non-official reserves increased by cUSD1bn, possibly reflecting the portfolio inflows during that month; hence, likely giving a further hint that the bonds’ proceeds has driven the reserve gains this month.   We see the CBE being in a comfortable reserve position, especially following the recent Eurobond issuance, which meant it has met this year’s funding target and provided some of next year’s funding already. Reserves are likely to be boosted further in the next couple of months, with inflows of USD2.75bn, representing second tranches of loan from international financial institutions led by the IMF. Such position, in addition to improved inflows, should start to put the EGP on a more stable path, in our view, awaiting further improvement in the balance of payments later this year, with higher gas production and a potential pick-up in FDI. (CBE, Mohamed Abu Basha)