Egypt’s current account deficit dropped 64% to $3.4bn in H1 FY 2017/18

Mohamed Samir
2 Min Read

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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Mohamed Samir Khedr is an economic and political journalist, analyst, and editor specializing in geopolitical conflicts in the Middle East, Africa, and the Eastern Mediterranean. For the past decade, he has covered Egypt's and the MENA region's financial, business, and geopolitical updates. Currently, he is the Executive Editor of the Daily News Egypt, where he leads a team of journalists in producing high-quality, in-depth reporting and analysis on the region's most pressing issues. His work has been featured in leading international publications. Samir is a highly respected expert on the Middle East and Africa, and his insights are regularly sought by policymakers, academics, and business leaders. He is a passionate advocate for independent journalism and a strong believer in the power of storytelling to inform and inspire. Twitter: https://twitter.com/Moh_S_Khedr LinkedIn: https://www.linkedin.com/in/mohamed-samir-khedr/