Egypt’s balance of payment (BOP) deficit grew by $8.6 billion in the nine-month period between July 2010 - March 2011 over the previous year, according to the Central Bank of Egypt (CBE).
While Egypt's trade balance is often in deficit, total BOP generally shows a net surplus due to capital inflow to the country through tourism, the Suez Canal and investment.
Deficit reached $5.5 billion compared to a surplus of $3.1 billion in 2009/2010, despite a significant 42 per cent growth in remittances from Egyptians abroad.
The major decline occurred in the period between January and March 2011, as the deficit grew to $6.1 billion, shadowing a surplus of $572 million in the period between July - December 2010.
CBE expects the deficit to stretch over $9 billion in June 2011, concluding the financial year, based on April and May’s readings.
Capital and financial accounts showed the largest decline as net outflows reached $1.8 billion in 2010/2011 compared to a net inflow of $5.2 billion in the previous year. This huge decline is mainly driven by deterioration in investment in financial securities in Egypt, which hit a net outflow of $969 million in 2010/2011 compared to a net inflow of $7.1 billion in 2009/2010.
T-Bills in particular witnessed the largest outflow whereas foreigners sold $4.9 billion worth.
Direct investment in Egypt slumped by 51.8 per cent to reach $2.1 billion as opposed to $4.3 billion the previous period.
Trade balance did not really change, marking a slight deterioration of 0.7 per cent.
Services balance recorded a decline of around $2 billion; mainly attributed to growth in transfers abroad of investment returns by $1.7 billion.
Tourism income overall grew by 15.6 per cent to reach $6.9 billion in the nine-month period. However, the first 3 months of 2011 witnessed a decline of 34 per cent; whereas February and March declined by 59.6 per cent.
On the other hand, the growth in remittances from Egyptians abroad of 42.5 per cent brought in $8.9 billion.