Egypt’s overall balance of payments dramatically improved in the Q1 (July-Sep) of FY2013/2014, turning to a USD 3.74bn surplus from a deficit of USD 518bn in the same quarter a year earlier on the back of massive donor assistance bloating both the current and capital accounts.

Likewise, the current account registered a USD 757mn surplus in Q1 FY 203/2014 compared to a USD 1.26bn deficit in the same quarter of the previous fiscal year primarily as a result of a USD 4.26bn injection in official transfers from foreign, mainly Gulf, governments following the army-backed ouster of Islamist President Mohamed Morsi.

The trade deficit in goods and services expanded by 22% y/y to USD 7.55bn in Q1 FY 2013/2014 primarily driven by a 64% y/y plunge in inbound tourism receipts to USD 931.1mn due to the street violence that engulfed Egypt following last summer’s political events. Lower tourism revenues reduced net services surplus from USD 1.64bn in Q1 FY2012/2013 to USD 135mn in Q1 FY2013/2014, whereas the merchandize trade deficit marginally shrank by 1.6% y/y to USD 7.68bn in Q1 FY2013/2014, reflecting broadly speaking stable figures for imports and exports.

Notably, workers’ remittances at USD 4.04bn were 16.8% y/y lower as many migrant laborers stayed away from Egypt during the traditional summer vacation season due to the political events.

Egypt’s capital and financial account surplus shot up from a USD 1.53bn in Q1 FY2012/2013 to USD 3.97bn in Q1 FY2013/2014 on the back of a USD 3bn deposit made into the central bank by Gulf countries. In addition, portfolio investments were beefed-up by the Egyptian government’s USD 1bn bond issuance.