The balance of payments, which measures Egypt’s dealings with other countries, recorded a surplus of $5.1bn during the first quarter (Q1) of FY 2017/2018, compared to $1.9bn in Q1 FY 2016/2017, according to the Central Bank of Egypt (CBE), in a report issued on Sunday.
This was attributed to the fact that the current account deficit was narrowed by 65.7% and the capital and financial accounts recorded a net inflow of $6.2bn.
Trade deficit declined by 5% to $ 8.9bn, from $9.4bn, as a result of the rise in exports by $578m, while merchandise imports increased by $10.3m.
Merchandise export proceeds grew by 11% to $5.8bn, from $5.3bn, thanks to the rise in both oil exports by 16.8% to $1.8bn from $1.5bn, and non-oil exports by 8.6% to $4.1bn from $3.7bn.
The services surplus doubled to $2.8bn, from $1.4bn, on the back of of the increase in Suez Canal revenues, which stand at $1.4bn from $1.3bn.
Investment income ran a deficit of $1.5bn, primarily because investment income payments registered $1.7bn, out of which 51.6% were profit transfers by oil and non-oil foreign companies operating in Egypt. In contrast, investment income receipts registered $229m.
Unrequited net transfers scaled up by 37.3% to $6bn, from $4.4bn, mainly due to the increase in workers’ remittances by $1.6bn, as a result of the liberalisation of the exchange rate.
The capital and financial account recorded a net inflow of $6.2bn in July/September 2017, against $7.2bn last year, mainly due to the total inflows of FDI in Egypt recording $3bn, while total outflows recorded $1.4bn. Accordingly, net inflows of FDI in Egypt registered $1.6bn as a direct result of the 84.2% rise in the net inflow of oil sector investments.
Portfolio investment in Egypt increased to register a net inflow of $7.5bn, against a net outflow of $840.9m. This was largely ascribed to the rise in foreigners’ investments in Egypt, recording net purchases worth $7.4bn, against $55m.
Other assets and liabilities registered a net outflow of $3.6bn, against a net inflow of $4.8bn. This came as a result of the rise in net foreign assets (NFA) of banks, spurred by the increase of foreign currency resources immediately after the liberalisation of the exchange rate. As such, NFA of banks increased by $2.1bn, while their foreign liabilities inched up by only $0.5bn.