Egypt’s transactions with the outside world from July 2015-September 2015 resulted in an overall balance of payments deficit of US$3.7 billion, compared to a surplus of $410 million in the same period last year, according to figures compiled by the Central Bank of Egypt.
This indicates more money is flowing out of Egypt than is coming into the country.
The trend was driven by Egypt’s current account deficit — a measure of the value of goods, services and cash transfers out of the country versus those coming in — which widened to almost US$4 billion, compared to US$1.6 billion in the same period of 2014.
The bulk of the gap between inflow and outflow is due to Egypt’s trade deficit, which registered roughly US$10 billion during the quarter, in line with last year’s figure.
Egypt’s import bill declined by 10.4 percent year-on-year to reach US$14.6 billion compared to US$16.32 billion the same quarter in 2014, largely due to lower global prices for oil and other commodities. However, the amount Egypt earns for exports also declined, dropping by 26.5 percent to reach US$4.6 billion, compared to US$6.3 billion last year. This decline was also largely due to a drop in global oil prices.
Egypt’s services balance remained positive, but the surplus shrank to US$1.69 billion compared to US$2.18 billion in the same quarter last year. Much of this was due to a decline in tourism revenue, which recorded US$1.73 billion compared to US$2.09 billion during the same months in 2014. Suez Canal revenue for the quarter also fell to US$1.37 billion, compared to US$1.47 billion in 2014.
Due to a plunge in commodity and cash aid during the period, Egypt also saw a sharp decline in official transfers from US$1.48 billion in 2014 to just US$21.9 million in 2015. Private transfers — primarily remittances from Egyptian abroad — dipped slightly to US$4.3 billion compared to US$4.71 billion in 2014.
Egypt’s capital and financial account showed healthier performance, with net inflows of US$1.5 billion compared to US$387 million in the same period last of 2014. Positive cash flows were largely due to an improvement in the “Other Assets” category, which records assets held by entities other than the Central Bank and other banks. This category saw net outflows shrink to US$690 million, compared to net outflows of US$2.16 billion in 2014.
The Central Bank did not explain this change in the press release accompanying data. Instead, it emphasized a marginal increase in Foreign Direct Investment (from US$1.32 billion to US$1.39 billion), and a jump in short term supplier credits from US$929 million to US$1.38 billion. The CBE also noted that portfolio investment reversed from net inflows of US$316 million in July-September 2014 to net outflows of US$1.41 billion in the same period in 2015, largely due to US$1.39 billion worth of bond repayments.