Egyptian remittances drop 29.2% in Q1 FY2023/2024

Ahram Online , Muhammed Khalid , Wednesday 3 Jan 2024

Remittances from Egyptians working abroad dropped 29.22 percent to $4.52 billion in the first quarter of the fiscal year 2023/2024 (July-September) from $6.39 billion in the same period a year earlier, according to data released by the Ministry of Planning.

File Photo: an employee counts banknotes at currency exchange shop in the Egyptian capital Cairo. AF
File Photo: an employee counts banknotes at currency exchange shop in the Egyptian capital Cairo. AFP


Quarterly, remittances declined by two percent in the July-September period, compared to $4.61 billion previously.

“The decline in remittances reflects expats’ concerns regarding the instability in the currency exchange market in Egypt, where different estimates of the dollar/pound exist in parallel with the official rate,” economist Bilal Shuaib told Ahram Online.

“Expats are also less confident about withdrawing remittances in USD from inside Egypt or abroad despite the assurances by the Central Bank of Egypt (CBE) regarding allowing clients to deposit amounts in USD without the requirement of proof of their origin,” Shuaib added.

The economist referred to the issuance of USD certificates of deposits (CDs) with seven percent and nine percent yields by the state-owned National Bank of Egypt (NBE) and Banque Misr as a way to encourage expats to increase their investments in Egypt.

He suggested that Egyptian banks could issue similar CDs at yields as high as 13 percent to lure in more USD inflows that will help Egypt narrow its financing gap.

In FY2022/2023, remittances – Egypt’s biggest source of foreign currency – tumbled 30.8 percent to $22.1 billion from $31.9 billion in FY2021/2022.

Egypt is currently experiencing a severe US dollar liquidity crunch. Approximately $20 billion in hot money fled the local market as investors sought higher interest rates elsewhere.

The government, in turn, announced a plan to collect $191 billion through 2026 by gradually expanding its initial public offering (IPO) program and introducing additional incentives for foreign investors, such as tax exemptions and golden licences.

In addition, Egypt's commitments under a $3 billion loan program with the International Monetary Fund (IMF) involve implementing flexible regimes for both exchange and interest rates in alignment with private sector standards, enhancing the role of the private sector in the economy, and accelerating the pace of IPOs.

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