Egypt's current account deficit narrows by 20.2 percent in 1Q FY2022/2023

Doaa A.Moneim , Friday 3 Feb 2023

Egypt’s balance of payments (BOP) witnessed an improvement in the first quarter of FY2022/2023 (July-September), as the current account deficit has narrowed by 20.2 percent to post $3.2 billion compared to $4 billion in the same period of the preceding fiscal year, the Central Bank of Egypt (CBE) announced on Thursday.

File Photo: A man counting Dollars. Al-Ahram


The CBE ascribed the improvement to the increase in tourism revenues, merchandise exports, oil and non-oil, and the rise in Suez Canal receipts.

Tourism revenues

Tourism revenues jumped by 43.5 percent in 1Q of FY2022/23 to record $4.1 billion compared to $2.8 billion in the corresponding period in FY2021/22, due to the rise in the number of tourist nights by 47.1 percent and the rise in the number of tourist arrivals to Egypt by 52.2 percent.

Suez Canal proceeds

In addition, transport receipts increased by 33.7 percent in 1Q of FY2022/23 to reach $3 billion, up from $2.3 billion, driven mainly by a rise in Suez Canal receipts by 19.1 percent, recording $2 billion against $1.7 billion in the same period in FY2021/22, driven by a pickup in the net tonnage of vessels by 13.8 percent.

Non-oil trade deficit

On the non-oil merchandise trade deficit, CBE data shows an improvement by $2 billion to register only $9 billion in 1Q of FY2022/23 compared to $11 billion posted in the corresponding period of FY2021/22; fuelled by an increase in non-oil exports and a decrease in non-oil imports.

Accordingly, non-oil merchandise exports increased by 5.1 percent to $6.3 billion, particularly for exports of phosphate and mineral fertilisers, gold, transmitter and receiver devices of radio and television, and ready-made clothes.

On the other hand, non-oil merchandise imports decreased by 9.9 percent to post $15.3 billion, especially for the imports of passenger vehicles, telephones, pharmaceutical preparations, gauze pads, and vaccines.

Oil trade balance

For the oil commodities trade balance deficit, the CBE explained that it stabilised at $106 million during 1Q of FY2022/23 as a main result of the surge in oil exports by $807.3 million, on the back of the increase in natural gas exports by $1.7 billion.

The rise was curbed by the decline in exports of crude oil by $449.9 million and oil products by $393.3 million during the same quarter. In addition, oil imports inched up by $812.2 million, mainly due to the hike in imports of oil products by $767.7 million.

Hot money outflows

Moreover, the capital and financial account recorded a net inflow of $4.4 billion as Egypt’s net foreign direct investments (FDIs) doubled to $3.3 billion in 1Q of FY2022/23.

Otherwise, the same quarter witnessed a withdrawal of portfolio investments in Egypt by non-residents of $2.2 billion compared to a net inflow of $3.6 billion recorded in the same quarter of FY2021/22.

The CBE explained that the exodus of funds over investors’ concerns resulting from the Russian-Ukraine conflict, as well as the contractionary monetary policies adopted by the US Fed, led to the flight of hot money from emerging markets.

Against this background, Egypt’s BOP recorded an overall surplus of $523.5 million in July/September 2022, according to the CBE.

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