Egypt’s BoP swings to a USD 2.8 bn surplus in FY 2025/26 as FDI covers most of a wider current account gap

Egypt’s balance of payments swung to a USD 2.8 bn surplus in FY 2025/26, compared to a USD 2.1 bn deficit the year before, according to Central Bank of Egypt figures (pdf). Net inflows into the capital and financial account more than doubled to USD 23.2 bn from USD 10.2 bn. Net FDI and portfolio money together brought in USD 22.2 bn, within USD 0.3 bn of the current account gap.

That gap is getting wider, though: The current account deficit grew 45.6% to USD 22.5 bn from USD 15.4 bn, as the merchandise trade deficit widened 27.1% to USD 64.8 bn and the investment income deficit rose 33.8% to USD 21.2 bn. Remittances, tourism, and a partial Suez Canal recovery softened the blow but couldn’t keep pace.

SOUND SMART- The balance of payments has two sides. The current account tracks what Egypt earns and spends on goods, services, income, and transfers. Two components drove this year’s widening: the merchandise trade deficit (what Egypt pays for imported goods minus export earnings) and the investment income deficit (what it pays foreign investors and lenders in interest, income, and dividends minus what it earns on its own investments abroad). The capital and financial account tracks the money flowing in from investment and borrowing. When those inflows more than cover the current account gap, the overall balance broadly moves into surplus.

Why it matters: The surplus leans on a one-off. Strip out the USD 3.5 bn Alam El Roum tranche booked in October-December, and the year would have closed roughly USD 0.7 bn in the red.

What widened the deficit

The bigger drag was non-oil imports. The non-oil trade deficit widened 25.4% to USD 46.6 bn as non-oil imports rose 16.9% to USD 83.9 bn. Intermediate goods, the inputs factories use to make other products, accounted for 55.2% of that increase. Non-oil exports grew a slower 7.8% to USD 37.3 bn, led by vegetables, gold, readymade garments, household appliances, and fruits.

Energy added to the bill. The oil trade deficit widened 31.5% to USD 18.3 bn. Oil imports rose 27.6% to USD 24.9 bn, mostly on more natural gas (up USD 4.7 bn) and crude (up USD 1.9 bn), while oil product imports fell by USD 1.2 bn. Oil exports rose 18.1% to USD 6.6 bn from USD 5.6 bn, and almost all of the USD 1.0 bn increase (USD 955.8 mn) came in 4Q.

Foreign investors are taking more home. Payments to foreign investors rose USD 5.2 bn to USD 23.9 bn, while receipts slipped to USD 2.7 bn. Only about USD 0.8 bn of the increase was interest, which rose to USD 8.1 bn. The rest is likely profits and dividends earned by foreign companies here. (Reinvested earnings, which the CBE books as both an income payment and an FDI inflow, rose to USD 6.2 bn from USD 4.2 bn.)

What kept it from getting worse: Remittances jumped 29.6% to USD 47.3 bn from USD 36.5 bn, by far the biggest offset. Tourism revenues rose 10.3% to USD 18.4 bn, and Suez Canal receipts climbed 21.6% to USD 4.4 bn as traffic partly returned, with net tonnage up 22.4% and transits up 9.8% to 13.6k vessels. That pushed the services surplus up 10.5% to USD 16.7 bn.

Where the money came from

FDI was the main source. Net FDI inflows rose to USD 18.0 bn from USD 12.2 bn, nearly all of it (USD 17.8 bn) outside oil. Greenfield investment and capital increases reached USD 8.8 bn from USD 5.5 bn, including USD 3.5 bn from Alam El Roum. Reinvested earnings added USD 6.2 bn, and foreigners buying property added another USD 2.8 bn. Oil and mining FDI shrank to USD 190.2 mn from USD 598.3 mn, as cost recovery payments to foreign partners rose to USD 6.5 bn.

Hot money came back too: Portfolio inflows more than doubled to USD 4.2 bn from USD 1.6 bn, even though foreigners were net sellers of Egyptian bonds, pulling out USD 935 mn.

And debt stopped draining USD: Medium- and long-term loans and facilities posted a net disbursement of USD 1.9 bn, against a net repayment of USD 3.5 bn the year before. Principal repayments fell to USD 7.1 bn from USD 12.4 bn, while disbursements held at about USD 9.0 bn.

Not all of it stayed in the system, though: Banks and the CBE added USD 9.7 bn to their assets abroad, against USD 5.6 bn the year before, which counts as an outflow in the BoP. That’s USD parked outside the country as a buffer, not spent.

REMEMBER- Egypt’s external buffers held up through the regional shock. Net international reserves rose to USD 55.1 bn at the end of June from USD 52.8 bn in March, and the banking system’s net foreign assets recovered to USD 22.9 bn in May from USD 21.4 bn in March. The EGP firmed to 49.2 against the greenback by end-June from 54.6 three months earlier. That came despite USD 9.5 bn in portfolio outflows after the regional conflict broke out in late February.

Looking ahead

The IMF sees faster growth and a wider gap: The IMF raised its 2026 real GDP growth forecast for Egypt to 5.1% — up from 4.6% in its July outlook and 4.4% last year — before projecting expansion to ease to 4.7% in 2027, according to its latest economic outlook (pdf). The Fund expects the current account deficit to broaden to 4.4% of GDP in 2026, up from 4.2% a year earlier, and widen further to 4.9% in 2027.

That growth call is close to the CBE’s own projection of 5.0% in FY 2025/26 and 4.9% in FY 2026/27, both revised up 0.1 ppt, with growth picking up to 5.4% in FY 2027/28.