The Central Bank of Egypt's headquarters in downtown Cairo (Photo: Reuters)
Egypt’s balance of payments deficit jumped 240 percent in the first half of the current fiscal year due to falling tourism receipts, Suez Canal revenues, and transfers, the Central Bank of Egypt (CBE) said Wednesday.
The overall balance of payments deficit reached $3.4 billion in the first half of fiscal year 2015/2016, compared to $1 billion in the same period of the previous year, as the current account deficit more than doubled to reach $8.9 billion from $4.3 billion.
Tourism revenues fell by almost a third to $2.7 billion, from $4 billion in the July-December period, compared to the previous year, according to the CBE.
The deadly downing of Metrojet Flight 9268 over Egypt’s Sinai peninsula in a terrorist attack last October led Russia and the UK to suspend all flights to Egypt’s popular Red Sea resorts throughout the past months.
The trade deficit shrunk slightly in spite of declining export proceeds, registering $19.5 billion versus $20.4 billion, as the decline in world oil and staple commodity prices had a significant impact on the imports bill, said the CBE.
Export proceeds declined by over a quarter to record $9.1 billion, due to the fall in world crude oil prices that slashed oil export revenues by $2.2 billion, the bank said in an official release.
Non-oil exports fell by 14 percent to $6 billion, according to the CBE.
But the commodity imports bill dropped by close to 13 percent to $28.6 billion, compared to $32.7 billion, as the value of both oil and non-oil imports dropped.
Businesses have complained of their inability to source US dollars to import both production materials and finished goods in recent months, though CBE Governor Tarek Amer says the bank has pumped $22 billion into the market to clear import backlogs, in addition to easing capital controls, since he took office last November.
Suez Canal receipts declined by over seven percent to register $2.6 billion for the period between July and December 2015, said the bank. The Suez Canal Authority has attributed declining receipts from tolls to a slowdown in global trade.
Net official transfers (which include foreign aid bar loans), plummeted by 99 percent to $32 million, from $2.6 billion, while remittances of Egyptian workers overseas decline by nearly 11 percent, as private transfers were shown to have declined by some 12 percent to stand at $8.3 billion.
The capital and financial account registered a rise in net inflow of 1,000 percent, reaching $9.2 billion, compared with $772.1 million in the corresponding period of the previous year, as investment inflows increased.
Foreign direct investment net inflows rose from $2.6 billion to $3.1 billion, with net inflows to greenfield investments almost doubling to $2.5 billion.
Other investments saw net inflows of $7.8 billion, including from short-term suppliers credit, which unfolded net inflows of $4 billion, and other assets and liabilities that unfolded a net inflow of $4.3 billion.
Portfolio investments in Egypt witnessed a net outflow of $1.6 billion compared to a prior outflow of $2.1 billion, which the bank says is largely due to the government’s scheduled repayment of bonds floated in world markets in 2005, and which accounted for $1.25 billion.
Foreign investors bought $500 million in Egyptian debt notes and stocks since the CBE sharply devalued the pound, according to Amer, who expects to see $5 billion in portfolio investments in the next four months.