Egypt's balance of payments (BOP) recorded an overall deficit of $502.6m during the first half (July/December 2024) of the fiscal year (FY) 2024/25,Central Bank of Egypt (CBE) figures showed. This represented a slight increase from the $409.6m deficit recorded in the same period of the previous fiscal year. The outcome was primarily driven by a widening current account deficit, which reached $11.1bn, compared to $9.6bn a year earlier, the CBE said on Monday. The larger current account deficit resulted mainly from a 47.4% increase in the trade deficit, which climbed to $27.5bn, coupled with a 21.2% decline in the services surplus, falling to $7.2bn. However, the expansion of the deficit was partly offset by a significant 81.6%rise in net current transfers, reaching $17.1bn, largely due to a surge in remittances from Egyptians working abroad. Furthermore, the investment income deficit narrowed by 17.2%to US$ 7.9bn.
The capital and financial account recorded a net inflow of $7.9bn during the six-month period, slightly down from $8.4bn in the prior year period. Within this account, Foreign Direct Investment (FDI) in Egypt registered a net inflow of $6bn, while portfolio investments experienced a net outflow of $ 3.7bn.
Regarding the trade deficit components, the non-oil trade gap widened by 33.8%, or $5.3bn, to reach $20.8bn. This was because non-oil merchandise imports grew faster than exports.
Non-oil imports rose 26.9% ($7.7bn) to $36.6bn, driven by increased purchases of wheat, pharmaceuticals, gauze pads, vaccines, soya beans, and spare parts for cars and tractors. Meanwhile, non-oil exports increased by 18.8% ($2.5bn) to $15.7bn, led by higher sales of wires and cables, ready-made clothes, aluminium products, and fresh/dried fruits.
The oil trade deficit also expanded significantly, reaching $6.7bn compared to $3.1bn previously. Oil imports surged by 53.3% ($3.4bn) to $ 9.7bn, fuelled by higher imports of natural gas (up $2.1bn), oil products (up $1.2bn), and crude oil (up $ 58.7m). Conversely, oil exports dropped by 7.0% ($224.6m) to $3.0bn, reflecting decreased export quantities and prices for crude oil (down $714.3m) and natural gas (down $265.3m), although exports of oil products increased by $755.0m due to higher volumes.
Within the services account, Suez Canal transit receipts experienced a sharp decline of 62.3%, falling to $1.8bn from $4.8bn. The CBE attributed this drop to ongoing Red Sea maritime navigation tensions, which forced route diversions, leading to a 69.2% fall in net tonnage transiting the canal (to 244.7m tons) and a 52.2% decrease in the number of vessels.
On a positive note for services, tourism revenues increased by 12.4% to $8.7bn, up from $7.8bn, supported by a rise in the number of tourist nights to 93.5m from 83.2m.
The surge in remittances from Egyptians working abroad was a key factor mitigating the current account deficit, rising 80.7% to $17.1bn from $9.4bn. The narrowing of the investment income deficit to $7.9bn (from $9.6bn) also helped; this resulted from a 10.7% decrease in investment income payments (to $9.2bn) combined with a 70.9% increase in investment income receipts (to $1.3bn).
Examining the capital and financial account further, the net FDI inflow of $6.0bn (up from $5.5bn) comprised several elements. FDI in the oil sector shifted to a net inflow of $196.9m from a previous net outflow of $422.2m, as inflows for greenfield investments rose to $2.9bn while cost recovery outflows by foreign partners fell to $2.7bn.
FDI into non-oil sectors achieved a net inflow of $5.8bn. This included $2.9bn from greenfield investments or capital increases (up from $1.9bn), $732.1m from real-estate purchases by non-residents (up from $ 536.7m), $ 2.2bn in net reinvested earnings (down from $2.6bn), and $321.9m in net proceeds from selling assets to non-residents (down from $626.4m).
Portfolio investment in Egypt recorded a significant shift, registering a net outflow of $3.7bn compared to a net inflow of $252.8m in the first half of the previous fiscal year.
Changes within the banking sector showed a net inflow of $7.4bn related to foreign assets (representing a decrease in assets), contrasting with a net outflow of $1.2bn previously. Bank liabilities posted a net inflow of $1.7bn (representing an increase in liabilities), compared to a net outflow of $120.9m in the prior period.
Finally, the change in the Central Bank of Egypt's liabilities recorded a net inflow of $704.5m, significantly lower than the $2.7bn inflow recorded in the same period last year.
