Egypt's current account deficit has widened by 225% y-o-y to USD 17.1 bn in the first nine months of FY 2023-24, up from USD 5.3 bn in the same period in the last fiscal year, according to Enterprise calculations, based on the Central Bank of Egypt figures (pdf).

But on the bright side, BoP is in the green: Despite the widening current account deficit, Egypt recorded an overall BoP surplus of USD 4.1 bn during 9M FY 2023-24, a significant increase from the USD 281.9 mn surplus recorded in the same period in the last fiscal year. On a quarterly basis, the balance of payments in the third quarter of the fiscal year was back in a surplus after retracting to a deficit in 2Q FY 2023-24.

DRIVING THE SURGE-

#1- Our oil trade balance fell back into a deficit: The oil trade balance recorded a USD 5.1 bn deficit, compared to a USD 1.7 bn surplus in the same period a year ago. This was primarily due to a 61% y-o-y drop in oil and gas exports to USD 4.6 bn.

#2- Red Sea disruptions are biting into Suez Canal receipts: Suez Canal transit receipts fell 7.4% y-o-y to USD 5.8 bn, with a sharp 57.2% y-o-y drop in the third quarter of the fiscal year after Houthi attacks on vessels passing the waterway started to pick up.

#3- Remittances inflows continued to fall until EGP float : Remittances from Egyptians abroad decreased by 17.1% y-o-y to USD 14.5 bn during the nine-month period, but recorded an 11.1% y-o-y jump in the month of March after the central bank floated the currency near to the beginning of the month.

SOFTENING THE BLOW-

#1- FDI inflows jump towards the end of the nine-month period: Net FDI inflows tripled y-o-y to USD 23.7 bn, up from USD 7.9 bn in the same period a year prior. The lion’s share of the inflows came in the third quarter of the fiscal year, with USD 18.2 bn in FDI being recorded — USD 15 bn of which was from the first payment from the Ras El Hekma agreement.

#2- Portfolio investments reverse course: Egypt recorded a net inflow of USD 14.6 bn in portfolio investments in 9M FY 2024-25, compared to a net outflow of USD 3.4 bn in the previous year, signaling renewed investor confidence at the end of nine-month period after the float in March and the deal with the IMF.

#3- Tourism revenues continue to grow: Tourism revenues increased by 5.3% y-o-y to USD 10.9 bn, up from USD 10.3 bn, driven by higher tourist arrivals and nights spent.

#4- Non-oil trade deficit narrows: The non-oil trade deficit improved by USD 1.5 bn to USD 23.7 bn, thanks to a 2.9% drop in non-oil imports and a 1.1% rise in non-oil exports.

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