Egypt’s balance of payments (BoP) turned to a deficit in the fiscal year 2015/16 from a surplus in the year before, largely due to the drop in the net current transfers and the travel balance that saw an outflow for the first time, the Central Bank of Egypt (CBE) announced on Wednesday.
The BoP saw a deficit of $2.8 billion in the fiscal year ending last June compared to a surplus of $3.7 billion in the fiscal year 2014/15, the CBE said in a report on its official website.
The current account deficit rose by 54.5 percent year-on-year to reach $18.7 billion in 2015/16, however, the trade deficit narrowed to register $37.6 billion in that period against $39.1 billion in 2014/15 due to the decline in the world crude oil prices, which affected both Egypt’s exports and imports.
The net official and private transfers including workers’ remittances have significantly fallen by 29.5 percent to register $16.9 billion in 2015/16 versus $21.9 billion in the fiscal year before.
According to the CBE, the services and income surplus narrowed by 59.1 percent in the aforementioned period, as Egypt’s travel balance saw an outflow for the first time in addition to a decline in the Suez Canal’s receipts.
The travel balance was affected as the country’s revenues from tourism dropped by 48.9 percent to $3.8 billion from $7.4 billion in 2014/15. Egyptians' travel payments rose to $4.1 billion from $3.3 billion due to the rise in the visa cards payments.
Egypt’s revenues from its vital Suez Canal waterway dipped by 4.5 percent to register $5.1 billion from $5.4 billion. The CBE attributed the drop to the decline in the SDR* value against the US dollar.
However, the capital and financial account registered a rise in net inflow, reaching $19.9 billion in the fiscal year 2015/16, compared to $17.9 billion in the fiscal year before, as investment inflows increased.
Foreign direct investment net inflows rose from $6.4 billion to $6.8 billion due to the increase in the greenfield investments.
*Special Drawing Rights (SDR): the foreign exchange reserve asset defined and maintained by the International Monetary Fund