CAIRO: Foreign investment in Egypt plummeted over its summer to almost a quarter of its level a year earlier as investors, unnerved by the region's political turmoil, fled, the central bank said on Tuesday. Foreign direct investment (FDI) fell to $440.1 million in July-September from $1.60 billion a year earlier, helping to create a $2.36 billion deficit in the balance of payments versus a surplus of $14.7 million a year earlier. "This deficit was due to the repercussions of the events that Egypt and the Arab region are going through and which negatively affected tourism revenue and foreign investment flows into Egypt," the central bank said in an emailed statement. However, private remittances overall, mainly from Egyptians working abroad, rose 31 percent to $4.01 billion. That helped to dampen an increase in the current account deficit, which widened 67 percent from a year earlier to $2.18 billion, the central bank said. A series of violent clashes against Egypt's ruling military council since a popular uprising ousted president Hosni Mubarak in February and an ambiguous timetable for a transfer of power to civilians have deterred both investors and tourists, analysts say. The central bank said investments to set up new companies or increase the capital of old ones fell 47 percent year-on-year to $521.9 million during July-September. Revenue from tourism dropped 26 percent to $2.7 billion. "To be honest, I think it is encouraging that FDI remains positive during a period of political and economic uncertainty," said Simon Kitchen, a Cairo-based strategist at EFG-Hermes. "Egyptians working overseas may be sending more money home to support families suffering from the economic slowdown," Kitchen said. Portfolio investment contracted by $1.7 billion, reversing a $5.9 billion expansion a year earlier, as many foreigner investors sold government securities after the uprising, the central bank said. Net sales of T-bills were $1.4 billion compared to net purchases of $4.7 billion a year earlier.
