Egypt’s current account deficit narrowed to USD 15.4 bn in FY 2024-2025, down 25.9% y-o-y from the USD 20.8 bn recorded a year earlier, according to central bank figures (pdf). The deficit shrank on the back of a marked increase in remittances, a rise in tourism revenues, and a jump in non-oil exports.

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BoP slips into deficit: The overall balance of payments recorded a USD 2.1 bn deficit during the fiscal year, compared to a USD 9.7 bn surplus a year earlier. The shift was mainly attributed to a decline in the net inflows of the capital and financial account, which recorded USD 10.2 bn compared to inflows of USD 29.9 bn in the fiscal year 2023-2024, which included USD 35 bn from the Ras El Hekma transaction.

DRIVING THE IMPROVEMENT-

#1- Remittances on the rise: Remittances from Egyptians abroad jumped 66.7% y-o-y to USD 36.5 bn last fiscal year, up from USD 21.9 bn in the fiscal year 2023-2024.

#2- Tourism revenues continued to climb, rising 16.3% y-o-y to USD 16.7 bn, thanks to a pickup in tourist nights to 179.3 mn from 154.1 mn.

#3- The investment income deficit narrowed 9.6% y-o-y to USD 15.8 bn, as investment income payments fell 3.7% to USD 18.7 bn and receipts jumped 50.1% to USD 2.9 bn.

DRAGGING THE BALANCE-

#1- Non-oil trade deficit widened 16.3% y-o-y to USD 37.1 bn due to increased spending on soya beans, wheat, spare parts for cars and tractors, corn, and raw tobacco. Imports jumped 21.9% y-o-y to USD 71.7 bn, and the rise in exports was not enough to help offset the increase. Non-oil exports rose 29.1% y-o-y to USD 34.6 bn, driven by a jump in exports of gold, fruits, and ready-made garments.

#2- Oil trade deficit nearly doubled: The oil trade deficit expanded to USD 13.9 bn from USD 7.6 bn a year earlier, as oil imports rose to USD 19.5 bn on the back of higher gas, oil products, and crude imports. Meanwhile, oil exports inched down by USD 128.2 mn to USD 5.6 bn due to falling crude and gas shipments, partially offset by a rise in product exports.

#3- Suez Canal revenues plunge: Suez Canal receipts fell 45.5% y-o-y to USD 3.6 bn during the fiscal year, with net tonnage down 55.1% and vessel transits falling 38.5% amid continued Red Sea disruptions.

#4- FDI inflows moderate: Net FDI into Egypt fell to USD 12.2 bn last fiscal year from USD 46.1 bn a year earlier, when inflows were inflated by the Ras El Hekma agreement. Non-oil FDI inflows came in at USD 11.6 bn, while oil FDI recorded a net inflow of USD 598.3 mn after a net outflow of USD 351.6 mn a year earlier.

#5- Portfolio inflows weaken: Portfolio investment in Egypt registered a net inflow of USD 1.6 bn during the period, down from USD 14.5 bn in FY 2023-2024.

#6- Higher debt repayments pressure the financial account: Egypt recorded a net repayment of USD 3.5 bn on medium- and long-term loans last fiscal year, compared to a net repayment of USD 2.4 bn a year earlier.

A LOOK AT 4Q-

Our balance of payments recorded a deficit of USD 196 mn in 4Q FY 2024-2025, reversing a USD 5.55 bn surplus during the same period a year earlier, but narrowing from a USD 1.37 bn deficit recorded during 3Q FY 2024-2025, HC Securities’ Heba Mounir told us.

Reuters also picked up the story.

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