CAIRO: Egypt posted a rise in Suez Canal revenues for May, reaching $395 million compared to $342.4 million a year earlier, according to figures from the canal authority.
May’s revenues are also higher than the previous month, which totaled $374.9 million.
According to the Suez Canal Authority, annual growth in revenues accelerated in May to 15.4 percent compared to 8.1 percent in April. Meanwhile, monthly growth rose to 5.4 percent in May after contracting 1.2 percent the month prior.
“The positive outturn in revenue, comparing with our forecast of $400 million, was the result of the combined improvement in tonnage and traffic relative to the previous month,” Beltone Financial wrote in a statement.
Total tonnage of vessels passing through the canal advanced 20.7 percent annually in May to 71.7 million tons after a modest 8.2 percent growth in April. On a monthly basis overall tonnage grew 8.2 percent in May from a 2.7 percent contraction in April.
Higher tonnage of both oil and non-oil vessels contributed to this increase.
Oil vessels’ tonnage rose 26 percent compared to the previous year in May after contracting 1 percent in April. The number of vessels also increased 6.4 percent annually after contacting 1.1% in April, backed by a rebound in traffic of both oil and non-oil vessels.
Annual growth of the number of non-oil vessels jumped to 8% in May 2010, from -0.7% the month before, further emphasizing the rebound in global trade growth.
The waterway is a vital source of foreign currency in Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad.
Last month, Nada Massoud, former senior economist at the Egyptian Center for Economic Studies, told Daily News Egypt that the foreign currency generated by the canal, and by other sources, is vital to Egypt’s economy in terms of imports, food security and financial security.
“The government uses foreign currency income to pay for its imports, most important of which is wheat, which plays a vital part in the countries food security. Foreign currency reserves have a role in decreasing the vulnerability of the Egyptian currency in times of crisis as it acts as a buffer against fluctuations of currency,” Massoud said.
The Economist Intelligence Unit (EIU) country report for June 2010, expects the canal’s revenues to play an important part in increasing foreign exchange reserves in the upcoming period.
“Capital inflows will be more moderate than in recent years, but rising Suez Canal receipts and a revival of tourism will lift foreign exchange reserves,” the report said.
Tarek Hassanein, a spokesman for SCA, previously told Daily News Egypt that the positive revenues of the canal indicate an improvement in world trade it has long been held by economists as a worldwide financial barometer.
“The canal is a good indicator of how the world economy is doing, not just the Egyptian economy,” said Hassanein. “Economies doing better means an increase in freight and an increase in freight means and increase in revenues for us.”
“The overall positive growth in Suez Canal revenues since the beginning of 2010 is, in our view, a reflection of the continued improvement in global trade and the effects of rising oil prices which renders alternative maritime routes more expensive” said Beltone.
“Overall, we continue to expect canal revenues to end the current fiscal year 2009/10 totaling $4.5 billion, slightly below the $4.7 billion registered in fiscal year 2008/09 and $5.2 billion in fiscal year 2007/08,” the statement added.
The canal authority left its transit tolls for 2010 unchanged. Beltone expect revenues to increase in 2011.
“As global trade improves, especially between Asia and the US, we expect to see a stronger recovery in fiscal year 2010/11 in revenues, especially if the authority decides to raise transit fees in 2011, raising revenues to $ 5 billion,” the statement concluded.
Ola El-Khawaga, economics professor at Cairo University believes that the recent depreciation of the pound against the dollar may be positively affecting the canal’s revenues.
“Suez Canal revenues may be positively affected by the depreciation and may have a general positive affect on the economy as it contributes to foreign reserves,” said El-Khawaga.
