Egypt’s current account deficit narrowed in 1Q FY 2023-2024 thanks to an increase inSuez Canal and tourism revenues, according to central bank figures (pdf). The current account deficit narrowed almost 12% y-o-y to USD 2.8 bn, down from USD 3.2 bn during the same period last year. The balance of payments recorded a surplus of almost USD 229 mn in 1Q 2023-2024, less than half of the USD 523.5 mn recorded during the same period last year.

This is our second quarter in the green: This is our second quarterly BoP surplus in a rowand our third quarterly surplus since 2014, after we broke the deficit streak in 2Q of last year.

The breakdown:

#1- A dip in exports: Exports weakened nearly 20% y-o-y to USD 8.3 bn, triggered by oilexports more than halving during the quarter to USD 1.6 bn “on the back of the decrease in the exports of natural gas … and oil products … due to the decline of the exported quantities and the global prices.” Meanwhile, non-oil exports inched higher to USD 6.7 bn from USD 6.3 bn the year before.

#2- Remittances declined yet again: Remittancescontinued to fall, hitting their lowest levelsince FY 2016-17 amid the continued currency uncertainty. Remittances to Egypt recorded USD 4.5 bn for the quarter — a near 30% drop from last year’s USD 6.4 bn.

#3- FDI also saw a sizable drop: Foreign direct investments came in at USD 2.3 bn, down from last year’s USD 3.3 bn. The figure was marginally higher from the USD 2.1 bn figure recorded in 4Q FY 2022-2023.

Helping cushion the losses:

#1- Imports continued to decline: Imports fell for the sixth consecutive quarter to hit USD 16.3bn from USD 19.1 bn in 1Q 2022-2023, as both oil (24% y-o-y) — thanks to dip in crude oil imports triggered by rising global prices — and non-oil (13% y-o-y) — thanks to a dip in the imports of corn, organic and inorganic compounds — imports fell. This resulted in the trade deficit narrowing to USD 7.9 bn from USD 9.1 bn a year ago.

#2- Tourism revenues rose 9% y-o-yto USD 4.5 bn, driven by an increase in both touristnights and arrivals.

#3- Transport receipts also grew over 13% y-o-y to USD 3.5 bn, driven by an increase inSuez Canal transit receipts — which were up 19% y-o-y during the period — thanks to a jump in both the net tonnage of vessels passing and the number of vessels passing by.

#4- Portfolio flows: Investors continued to pull capital from financial assets, but at a much slower pace. Egypt recorded some USD 523 mn of net portfolio outflows during the quarter compared to USD 2.2 bn in the same quarter last year.

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