Egypt’s balance of payments in surplus

During July/December of FY 2007/2008, Egypt’s balance of payments (BOP) ran an overall surplus of US$ 3.1 billion (against US$ 2.9 billion in the corresponding period of the previous FY). This was a main outcome of a net inflow of US$ 3.1 billion in the capital and financial account; and a deficit of US$ 0.2 billion on the current account, generating from the expansion in the trade deficit which exceeded the surplus on services and net unrequited transfers.

Merchandise exports stepped up by US$ 2.4 billion or 22.8 percent, to reach US$ 13.1 billion. Non-oil exports were the main engine, expanding by 26.2 percent, (mainly finished goods and raw materials), while oil exports augmented by 19.1 percent. Merchandise imports increased by US$ 7.1 billion or 41.2 percent, to reach US$ 24.4 billion, driven by the noticeable rise in oil imports, as well as non-oil imports. The services surplus registered US$ 6.8 billion, (compared with US$ 5.6 billion in the period of comparison). This was mainly due to arise of 28.5 percent in services receipts; chiefly tourism revenues rising by 30.1 percent, to US$ 5.6 billion, and transport proceeds because of the rise in Suez Canal earnings by 24.6 percent to US$ 2.5 billion, spurred by the rise in the number of transiting ships and in net tonnage. In addition, receipts of investment income accelerated by 18.7 percent.

Net unrequited transfers rose by 42.5 percent, to reach US$ 4.2 billion during the period under review, compared with US$ 3.0 billion.

As for the capital and financial account, foreign direct investment (FDI) in Egypt slightly increased during the first half of 2007/2008, thereby achieving a net inflow of US$ 7.8 billion, against US$ 7.2 billion. This can be explained by a number of triggers. Firstly, investment inflows for incorporations or for capital increase remained almost unchanged at US$ 3.5 billion. Secondly, FDI in the oil sector stepped up to post a net inflow of US$ 2.9 billion, against US$ 1.2 billion. Finally, privatization proceeds registered US$ 1.4 billion, against US$ 2.6 billion.