Egypt's overall balance of payments (BoP) registered a surplus of $7 billion in the first half of the current fiscal year (2016/17), a significant leap from the $3.7 billion recorded in deficit the previous year, the Central Bank of Egypt (CBE) said in a statement on its website, attributing the improvement to the November pound flotation decision.
The capital and financial account saw a surge in net inflow – from July to December 2016 – amounting to $17.6 billion, as opposed to $6.2 billion in the same period the previous year, the statement said.
“This came in the wake of the decision to float the Egyptian pound's exchange rate in November 2016, to be left up to the dynamics of supply and demand. This decision had a positive impact on the BOP components during the period,” read the CBE statement.
On 3 November, the central bank floated the pound against the dollar in an attempt to alleviate the country’s flagging economy, leading the pound's rate to plummet, reaching an average exchange rate of EGP 18.5 to the dollar, compared to EGP 8.88 prior to the flotation.
The current account deficit dropped by 2.1 percent in the last six months of 2016 to record $9.4 billion from $9.6 billion in the same period the year before, due to the narrowing of the trade deficit by 10.1 percent to register $17.9 billion.
From July to December 2016, commodity exports jumped by 14.4 percent to $10.4 billion, while commodity import payments dropped by 2.3 percent to $28.3 billion, according to the CBE.
The bank said that the service surplus shrank by 47.2 percent in the aforementioned period, as Egypt’s tourism revenues slumped by 41.5 percent, generating $1.6 billion, compared to the same period in the last fiscal year.
However, quarter-on-quarter, the tourism sector showed some recovery as the sector’s receipts rose 8.9 percent in the second quarter of the current fiscal year versus the quarter before.
Egyptians' overseas travel transactions have “started to achieve net inflow again,” recording $636.2 billion from October to December last year, down from $1.1 billion from July to September, said the CBE.
Revenue from the Suez Canal dropped 5 percent to $2.5 billion.
Foreign direct investment net inflows rose from $3.1 billion to $4.3 billion due to a rise in petroleum investment inflows.
Foreign holding of the local treasury bills increased to register net purchases of some $686.7 million versus net sales of $38.3 million.