Egypt’s payment balance ran a $410.9 mln total surplus in 1H FY2019/2020

Doaa A.Moneim , Tuesday 31 Mar 2020

The central bank also reported that the investment income deficit widened to $5.8 billion


The Central Bank of Egypt (CBE) has announced that during first half of FY 2019/2020, Egypt’s balance of payments ran an overall surplus of $410.9 million, compared with a total deficit of $1.8 billion in the same period a year earlier.

In its balance of payment report on Tuesday, the CBE unveiled that the current account deficit retreated by $684.4 million, 13.0 percent, recording $4.6 billion, down from $5.3 billion thanks to the decline in the non-oil trade deficit and the rise in unrequited current transfers.

Yet, the reversal of the oil trade balance from a surplus to a deficit, the fall in the services surplus, and the rise in investment income deficit have limited the improvement seen in the current account deficit, according the report.

In this regard, the report showed that the non-oil trade deficit fell by $1.4 billion, recording $18 billion, down from $19.4 billion.

The CBE attributed the drop to the pickup in non-oil merchandise exports by $940.9 million to $9.2 billion, up from $ 8.3 billion, adding that exports which witnessed increases were mainly gold, radio and TV transmitters and receivers, drugs, vaccines, serums and pharmaceuticals, and organic and inorganic compounds.

Moreover, the drop was an outcome of a non-oil merchandise import decline by $490.7 million to $27.2 billion, down from $27.7 billion, principally imports of cast iron; wheat; spare parts and accessories of cars and tractors; and drugs.

Meanwhile, the report revealed that unrequited current transfers saw a rise, moving up by $1.7 billion to $13.6 billion up from $12 billion, supported primarily by the 13.5 percent hike in workers’ remittances.

For the oil trade balance, the report unveiled that it ran a deficit of $733.3 million compared to a surplus of $150.8 million on the back of the decline in oil exports by $1 billion to $5 billion, down from $6 billion, driven mainly by the drop in the exports of crude oil and oil products, despite the increase in the exports of natural gas.

There was also a marginal decrease in oil imports by $79.7 million to $5.78 billion, down from $5.86 billion, as a result of lower imports of oil products, as importation of natural gas has stopped starting the second quarter of FY 2018/2019, and higher imports of crude oil.

The report also showed that services surplus declined by $1 billion to $6.3 billion, down from $7.3 billion, because of a number of developments including the retreat of travel surplus by $155.4 million to $5.3 billion, down from $5.4 billion, due to the increase in both travel receipts, tourism revenues, by $459.7 million to $7.2 billion, and travel payments by $615.1 million to $2 billion.

Furthermore, it came as a result of the hike in Suez Canal receipts by $103.8 million to $3 billion, up from $2.9 billion, besides that transportation surplus, excl. Suez Canal, narrowed by $399 million to $298.6 million down from $697.6 million, in addition, the deficit on government services and other services rose by $527.2 million to $2.3 billion up from $1.8 billion.

According the report, the investment income deficit widened by $571.1 million to $5.8 billion, up from $5.2 billion, as a result of the rise in investment income payments by $604.8 million to $6.3 billion, up from $5.7 billion.

Regarding capital and financial account, the report demonstrated that it recorded a net inflow worth $5.2 billion, thanks to the portfolio investment in Egypt which recorded net inflows of $273.6 million, a reversal from the net outflows of $5.9 billion, despite the volatility of global financial markets, especially the emerging markets.

Additionally, total inflows of foreign direct investments (FDIs) moved up by $1.2 billion to $9.2 billion, up from $8 billion.

On the other hand, total outflows increased by $378.9 million to $4.2 billion, up from $3.8 billion.

“This resulted in an increase in net FDI in Egypt by $773.8 million, recording a net inflow of $5 billion driven by the increase in net inflows for greenfield investments by $1.2 billion to $3.2 billion,” according the report.

In respect of medium- and long-term loans and facilities, the report noted that it recorded net disbursements worth $2.1 billion, increased by $1.2 billion.  

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