Egypt’s total external debt jumped to $125.3 billion by the end of the first quarter (Q1) of the current FY2020/2021, up about $1.8 billion year-on-year, according to the Central Bank of Egypt.

In its quarterly report on Egypt's external position, CBE attributed this rise to the increase in net disbursements of loans and facilities by $0.4 billion, together with the depreciation of the US dollar exchange rate versus other currencies of external debt, which led to an increase of $1.4 billion in book value.

According to the report, long-term external debt surged to $113 billion (accounting for 90.2 percent of total external debt) by end of Q1 of FY2020/21, up by about $0.4 billion compared to end of June 2020.

Meanwhile, the report showed that short-term debt increased by about $1.4 billion to reach about $12.3 billion – 9.8 percent of total external debt.

Its ratio to net international reserves edged up to 32.1 percent at end of the Q1 of FY2020/21, up from 28.5 percent at end of June 2020, according to the report.

Egypt's debt-service ratio registered 44.7 percent in the Q1 of FY2020/21, it said.

However, external debt remains within manageable limits, and its position continues to have a favorable structure, as 90.2 percent of the debt is long-term, it added.

Current account deficit surged

Egypt's Balance of Payments (BOP) for transactions with the external world recorded a deficit of $69.2 million during Q1 of the FY2020/2021 (July/Sept), against a surplus of $ 227.3 million in the same quarter of FY2019/20, according to the report.

It also said that the current account deficit doubled to about $2.8 billion in Q1 of FY2020/21, up from about $1.4 billion in the same quarter of FY2019/20.

The report attributed such an increase to the decrease in the services balance surplus by 78.3 percent in 1Q of FY2020/21, recording $876.3 million (down from about $4.0 billion in Q1 of FY2019/20), and the increase in the non-oil trade deficit to about $8.7 billion (against about US$ 8.2 billion).

On the other hand, the Egyptian expats remittances increased by 19.6 percent in Q1 of FY2020/21 to about $8.0 billion, up from about $6.7 billion in the same quarter of FY2019/20, while the oil trade balance turned into a surplus of $143.7 million (against a deficit of about $606.2 million), according to the report.

Investment balance decrease

The investment income balance deficit decreased by 7.8 percent to post $3.1 billion in Q1 of FY2020/21, down from $3.3 billion in Q1 of FY2019/20, according to the report.

The report also said that capital and financial account’s net inflows to Egypt rose to $3.9 billion in Q1 of FY2020/21, up from $657.9 million in Q1 of FY2019/20.

Egypt’s International Investment Position (IIP) at end of September 2020 recorded net external liabilities (assets minus liabilities) of about $197.1 billion, up by 2.8 percent compared to end of June 2020, the report said.

Meanwhile, Egypt’s net international reserves (NIRs) increased by $0.2 billion to reach $38.4 billion, covering 7.2 months of merchandise imports at end of Sept 2020 due to the rise in gold reserves by $0.3 billion, it added.

During the preparation of the report, NIRs reached $40.3 billion at end of March 2021, covering 7.5 months of merchandise imports, according to CBE.

According to the report, banks’ net foreign assets increased by $4.3 billion during Q1 of FY2020/21, while foreign currency deposits with banks decreased by 1 percent to reach $4 billion at end of September 2020 (making up 15.5 percent of total deposits).

FDIs to Egypt declined

For the foreign direct investment (FDI) inflows to Egypt, the report showed that they contracted by 31.8 percent in Q1 of FY2020/21 to post $1.6 billion, down from $2.4 billion in Q1 of FY2019/20, owing to the shift in net investments in the oil & gas sector to a net outflow of $75.3 million (from a net inflow of $744.2 million).

 

The report also attributed the FDI contraction to the decline in the net investments in the non-oil sectors to register $395.5 million, on the back of the decrease of $49.2 million to  $235.1 million in net inflows for capital increases.

Furthermore, inflows for establishing greenfield projects retreated by $27.7 million, to post only $ 8 million, while inflows for real estate purchases in Egypt by non-residents fell by $3.2 million, to stand at $127.9 million, according to the report.

In contrast, proceeds from selling local entities to non-residents picked up to $24.5 million.

The retained earnings and credit balances registered a surplus by $127.6 million in Q1 0f FY2020/21 to post $1.3 billion, the report said.