Egypt’s current account deficit narrows to USD 756mn in H1 FY2013/2014 on ample GCC aid

By bne IntelliNews April 2, 2014

Egypt’s current account gap shrank to USD 756mn in H1 (July-December) of FY 2013/2014 from USD 4.9bn in the same period a year earlier due to a massive injection of Gulf aid, indicated figures released by the central bank. A narrowing trade deficit, compensating for the shrinkage in the services surplus, also helped improve Egypt's external position over the period.

Net official transfers, representing mostly cash injections from Gulf countries, jumped to USD 6bn in H1 FY 2013/2014 from USD 629mn in the comparable period the previous year, while net private transfers, representing mostly workers’ remittances, declined by 7.5% y/y to USD 8.48bn.

The trade deficit shrank by 16.8% y/y to USD 15.43bn as a result of higher petroleum exports, pushing overall exports up by 7.5% to USD 12.57bn, and lower oil and non-oil imports, pushing overall imports down by 7.3% y/y to USD 28bn. Meanwhile net services surplus narrowed to USD 172mn in H1 FY 2013/2014 from USD 3.85bn in the comparable period the previous year due to travel receipts plummeting to USD 1.87bn from USD 5.58bn in the period under comparison.

The number of tourist nights spent in Egypt dropped almost by two-thirds after the sudden eruption in terrorism activity that followed a security crackdown on a Muslim Brotherhood sit-in in Cairo last July.

Egypt’s net capital and financial account registered a USD 3bn surplus in H1 FY 2013/2014 down from a USD 6.4bn surplus the previous year supported by a decline in central bank liabilities to the external world. Egypt repaid during the first-half of the fiscal year deposits made by Qatar in the previous year. Also, the financial account was uplifted by a USD 957mn bond issuance during H1 FY 2013/2014.

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