Egypt’s BOP surplus records $311.4m in 1Q 2021/22

Hossam Mounir
5 Min Read

Egypt’s transactions with the external world recorded an overall surplus of $311.4m between July and September 2021, up from a deficit of $69.2m in the same period of the previous year.

This improvement proved the ability of the Egyptian economy to withstand the negative effects of the coronavirus pandemic that have affected the global economy.

Such an overall surplus was realised despite the rise in the current account deficit to $4bn from $2.8bn in the same period of the previous year mainly because of the increase in the non-oil trade deficit by 26.1% to $11bn, triggered by higher imports of medical supplies and equipment as well as the import of production requirements. 

However, the improvement in the service balance, supported by the rise in tourism revenues by $2bn to $2.8bn, helped mitigate the current account deficit.

Furthermore, the capital and financial account registered net inflows of $6bn, compared to $3.9bn, supported by net inflows of direct and portfolio investments by $1.66bn and $3.6bn, respectively.

The non-oil trade deficit also widened by 26.1% to post $11bn against $8.7bn in the corresponding period, as the increase in non-oil imports surpassed that of non-oil exports.

Non-oil imports rose to $16.9bn, up by $3.5bn. Such a rise was mainly in the imports of pharmaceutical preparations, gauze pads, vaccines, soya beans, propylene polymers, cast iron, and wheat.

Non-oil exports also increased by $1.3bn to register $6bn. The rise was pronounced in the exports of inorganic and organic compounds, namely phosphate/mineral fertilisers, wires and cables, and ethylene-propylene polymers.

Meanwhile, the investment income deficit grew by 26.6% to stand at $3.9bn, up from $3.1bn, as investment income payments went up by $871.4m to register $4bn, reflecting a rise in both earnings of foreign direct investments (FDIs) in Egypt and interest and dividends on foreigners’ investment in Egyptian bonds and securities.

Moreover, investment income receipts rose by $54.5m to record $112m due to higher interest and dividends on foreign securities and bonds.

Additionally, the oil trade balance shifted from a surplus of $143.7m to a deficit of $101.1m on the back of a rise in world oil prices, and it represents the difference between the income earned and paid from and to the external world on portfolio investments, direct investments, bank deposits, and external debt.

Furthermore, the services surplus rose by $2.1bn to post $2.9bn, compared to $876.3m, mainly due to an increase in tourism revenues, which recorded $2.8bn, up from $801m; and the growth in transport receipts by 31.0% to stand at $2.3bn, up from $1.7bn, mainly driven by the increase in Suez Canal receipts by 22.3%, which registered $1.7bn.

Net inflows to the capital and financial account also rose to $6bn due to the following main developments:

Portfolio investment in Egypt registered a net inflow of $3.6bn, down from $6.7bn. 

Net FDIs in Egypt increased by 3.7%, registering $1.66bn.

Moreover, FDIs in non-oil sectors increased by $473.7m, posting a net inflow of $2.2bn. This was a combined result of the rise in net retained earnings and credit balances’ surplus by 24.7%, posting $1.5bn.

Net outflows from the oil sector also moved up to $489.2m from $75.3m. This was an outcome of a decline in total inflows, which recorded only $1.2bn, down from $1.56bn, representing new investments of foreign oil contractors; and a rise in outflows to $1.7bn, compared to $1.63bn, as a cost recovery for the exploration, development, and operation previously incurred by foreign partners.

Furthermore, medium- and long-term loans and facilities recorded a net repayment of $2.1bn, against a net disbursement of $2.2bn.

Share This Article