Beltone Financial stated in a research report that it expects the Egyptian tourism sector’s
revenues to reach $6.2bn by the end of the current fiscal year 2017/2018, up from $4.4bn in FY 2016/2017.
Beltone added in its report that it expects that FY 2017/2018 will witness a reduced current account (CA) deficit and normalised portfolio inflows.
“We expect this trend to continue through FY 2017/2018 with Egypt’s trade deficit to remain rigid, especially as investment picks up, driving increased import volumes,” according to Beltone.
Beltone pointed out that a tourism pick-up, coming from a low base, will provide relief for the CA.
Beltone predicated the return of fixed income inflows to their natural levels yet maintained capital flows will be supported by inflows into equities.
“We believe positive supply side developments will support the stability of the pound, despite due payments of about $8.4bn,” Beltone stated.
Beltone in its report noted that in the first half (H1) of the current FY, the trade deficit fell by $0.3bn to reach $18.7bn, as Q2 FY 2017/2018 witnessed an addition of $0.9bn with the continued recovery of imports.
It said that the services side provided support for the CA balance with the recovery of tourism revenues, rising to $5bn, up from $1.7bn in H1 2016/2017.
Meanwhile, “foreign remittances maintained their strong inflows that returned to the system post-flotation, rising to $13.1bn in H1 2017/2018, up from $10.1bn a year earlier,” Beltone said.
“These advocated the significant improvement in the CA deficit to $3.4bn, down from $9.4bn in H1 FY 2016/2017, which comes below our expectations of a $7bn deficit,” Beltone continued.
Beltone noted that the bulk of net portfolio investment flows were generated earlier in the year, as Q2 FY 2017/2018 witnessed an inflow of only $0.5bn, compared to $7.5bn in Q1 FY 2017/2018, which contributed to the reduced overall balance of payments surplus of $0.5bn in Q2 2017/2018, down from $5bn a quarter earlier.
Beltone also noted the reduction in due payments by the Central Bank of Egypt to $3.1bn, down from $8.1bn in H1 FY 2016/2017.
Beltone Financial Holding is an investment bank and financial services firm in the Middle East.