Egypt July-March balance of payments deficit doubles to $11.2 bln

Reuters and Ahram Online, Monday 11 Jun 2012

Fall in investment and tourism sector helps widen Egypt's balance of payment deficit; difficulties partially offset by a surge in remittances from Egyptians abroad

Tourism, traditionally a main generator of foreign currency to Egypt, saw receipts drop to $7.1 billion in the nine months to March 2012 (Photo: Reuters)

Egypt's balance of payments slid deeper into the red in the first nine months of 2011-2012 with a deficit of $11.2 billion compared to a shortfall of $5.5 billion a year earlier, as political turmoil hit investment and tourism, figures showed.

The country's economy has been hammered by unrest in the wake of the uprising that toppled Hosni Mubarak in February 2011. Tourism and investment, two of Egypt's main sources of foreign currency, have been among the hardest hit.

The current-account deficit widened to $6.4 billion for the nine-month period from July-March 2011-12, from $4.7 billion in the same period a year earlier, according to central bank figures obtained by Reuters.

The state news agency, MENA, also published some of the main numbers but not a full breakdown.

Net transfers reached $13.3 billion, out of which $12.8 billion private transfers which mainly consists of the remittances of Egyptians abroad. This figure grew from $8.9 billion in the corresponding period last year.

Egypt's financial year begins on 1 July.

Foreign direct investment (FDI) tumbled to $218 million in the nine-month period of 2011-12 from $2.1 billion in the same time during 2010-2011.

FDI had been a major component fuelling Egypt's growth until the anti-Mubarak uprising.

Portfolio investments show a net outflow of $4.6 billion, a significant growth from last year's $969 million as a result of the exit of foreign holdings in Egyptian government debt instruments. Foreigner sale of treasury bills amounted $3.9 billion in the first nine month of the current financial year opposed to just $1.8 billion last year.

Tourism receipts dropped to $7.1 billion from $8.7 billion a year earlier.

Egypt's net foreign reserves, the Egyptian pound's last line of defence against balance of payment pressures, climbed $302 million in May to reach $15.52 billion. Their growth, however, is boosted by Saudi aid as well as other slight improvements in investments in the past few months.

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