Egypt’s current account witnessed a significant improvement, achieving a sharp decline of 64% in the deficit for it to reach $3.4bn in the first half of fiscal year (FY) 2017/18, dropping from $9.4bn in the same period FY 2016/17.
According to the balance of payments (BOP) performance report issued by the Central Bank of Egypt (CBE) on Thursday, the capital and financial account recorded a net inflow of $10.4bn, down from $18.7bn last year. Meanwhile, the overall BOP witnessed a surplus of $5.592bn compared to a surplus of $7bn in the same period a year earlier.
The improvement in current account performance was backed by the surge in services balance—which tracks financial flows, including the net amount of payments of interest and receipts from international tourism—registering at $5.3bn from $1.8bn in the year prior. The surge was driven by a $3.8bn surplus in travel balance, and 10% increase in Suez Canal receipts to $2.8bn.
Furthermore, net current transfers also expanded by 29.5% to $13.1bn, supported by the increase in workers’ remittances by $3bn, the report indicated.
Also, Egypt’s trade deficit witnessed a slight decrease of 1.4%, to $18.7bn, due to the rise in merchandise exports at a higher pace—increasing by 15.4% to reach $12.1bn—than merchandise imports, which rose by 4.5% to $30.8bn.
According to the CBE, total foreign direct investments (FDI) recorded $6.6bn, while total outflows accounted for $2.8bn. Accordingly, net FDI in Egypt registered $3.8bn, $2.1bn of which was oil sector investments.
Meanwhile, portfolio investment accelerated to register net inflow of $8.0bn, due to the rise in foreigners’ investments in Egyptian treasury bills, recording net purchases of $8.1bn compared to $686.7m in the same period last year.
Moreover, the net external borrowing of medium- and long-term loans and facilities retreated to $3.5bn. The net change in the CBE’s foreign liabilities decreased, posting a net external repayment of $3.1bn in the reporting period (against a net disbursement of $ 8.1bn).
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