Egypt’s overall balance of payments (BoP) surplus increased to $4.1bn during the first three quarters of fiscal year 2023/2024 (July/March), driven by a surge in foreign investment. This comes despite a widening current account deficit, according to the Central Bank of Egypt’s (CBE) data.
The improvement in the BoP surplus is largely attributed to a net inflow of $20bn in the capital and financial account, compared to $8.1bn in the same period last year. This positive shift reflects a significant rise in foreign direct investment (FDI) and a return of portfolio investment inflows.
FDI in Egypt surged to $23.7bn, compared to $7.9bn previously. This increase was fueled by inflows of $15bn in the January-March quarter, following the implementation of the Ras El Hekma agreement. Additionally, greenfield investments by foreign oil companies contributed to a rise in FDI in the oil sector.
Portfolio investments in Egypt also shifted to a net inflow of $14.6bn, signifying renewed confidence from foreign investors, particularly after the economic decisions taken by the government in March 2024.
However, the current account deficit widened to $17.1bn from $5.3bn. This rise was primarily driven by a decline in the oil trade balance and a decrease in remittances from Egyptians working abroad.
The oil trade balance shifted into a deficit of $5.1bn, mainly due to a drop in the value of oil exports exceeding the decrease in oil imports. Suez Canal transit receipts also declined by 7.4% to $5.8bn, reflecting a decrease in both net tonnage and the number of transiting vessels. Remittances fell by 17.1% to $14.5bn.
Partially offsetting the widening deficit was an improvement in the non-oil trade balance and a rise in tourism revenues. Non-oil merchandise imports decreased, while non-oil merchandise exports increased slightly. Tourism revenues grew by 5.3% to $10.9bn due to an increase in both tourist arrivals and nights spent in Egypt.
