CAIRO: Egypt’s current account deficit shrank to $2.4bn in the 2013-14 fiscal year from $6.4bn the previous year, boosted by billions of dollars in aid from Gulf Arab donors, the central bank said yesterday.
Saudi Arabia, Kuwait and the United Arab Emirates have pledged more than $12bn aid to Egypt since July 2013 — roughly the same as the net official transfers figure released by the central bank yesterday.
The bank also said that improvement in the current account was driven by a rise in remittances and other payments from abroad, including aid. Net official transfers increased by more than tenfold, to $11.9bn in the fiscal year that ended in June from $835.6m the previous fiscal year. However, Egypt still posted a current account deficit of $2.123bn between April and the end of June — the fourth quarter of the fiscal year.
The marked difference appeared linked to the timing of official transfers — most likely the receipt of foreign aid from Egypt’s Gulf allies.
In the third quarter, official transfers were $4.5bn, compared to just $1.4bn in the fourth quarter, according to calculations.
Abdel Fattah Al Sisi took office as president in June and pledged to combat terrorism, improve the economy and restore stability after three years of upheaval, which began when a popular uprising ended three decades of rule by Hosni Mubarak.
Mohamed Abou Basha, economist at investment bank EFG-Hermes, said the figures revealed that Egypt’s finances are still precarious.
“From a macro standpoint, things were not really that solid, if you look at tourism and exports. It’s the foreign flows that helped restore macro stability and support the currency.”
The central bank said the improvement might have been larger without a sharp decline in tourism revenues. They fell 48 percent to $5.1bn from $9.8bn a year earlier.
The trade deficit grew by 9.8 percent to $33.7bn from $30.7bn a year earlier, the central bank said, as merchandise imports rose 3.7 percent and merchandise exports fell 3.2 percent.
Foreign direct investment in Egypt rose to about $4.1bn in the last fiscal year compared with $3.8bn in the previous year, the central bank said, attributing the increase to a net inflow for oil sector investments.
Reuters
