The trade deficit grew to LE26.3 billion in June, jumping by more than 62.3 percent, compared to the LE16.2 billion deficit recorded in the same month last year.
The widening deficit — one of the key drivers of the foreign currency shortage — was driven by both an increase in imports and a decline in exports, the state-owned Middle East News Agency (MENA) reported.
An increase in the value of imports to Egypt means that more dollars are flowing out of the country to pay for goods from abroad. Meanwhile, declining exports means there is a corresponding drop in hard currency paid by customers abroad.
During June 2015, the state statistics agency CAPMAS reported that the value of Egypt’s exports to the world fell by more than 24 percent year over year, dropping to just LE14.4 billion.
CAPMAS attributed the drop to a decline in market prices for key Egyptian export commodities like crude oil and petroleum products.
Meanwhile, imports rose by 15.3 percent year over year to reach LE40.7 billion.
Foreign reserves did grow during the month of June, reaching US$20.53 billion, the highest level since 2011. However, this increase came after Egypt’s allies in the Gulf made US$6 billion in deposits to the Central Bank of Egypt.
Speaking at a conference last week, Investment Minister Ashraf Salman suggested that a devaluation was becoming inevitable.
“Is it better to deplete the reserves or depreciate?” Salman asked. “The answer in this global crisis is to take care and to increase your foreign reserves. Depreciation here is not a choice.”