Egypt’s domestic debt stood at 164.4 billion Egyptian pounds ($42.5 billion) in June 2000, bringing domestic debt/GDP to 54 percent, up from 51 percent in FY99. External debt stood at $27.8 billion in 2000, down from $28.3 in FY99. External transactions showed an improvement in FY00 in both the trade and current account balances over the previous year.
The current account deficit fell 31.5 percent to $1.2 billion from $1.7 billion in the year ago period. The trade deficit fell 8.4 percent from $12.5 billion to $11.5 billion. More recent figures reveal that the first quarter of 2001 brought fresh signs of an economic upturn. The trade deficit fell to $2.4 billion, shrinking 21 percent over the comparable period of last year.
Exports grew at 26.8 percent on the back of a 68 percent increase in oil revenues. Notwithstanding that OPEC ministers agreed on November 12 to stop adding more crude oil to the market and further decided on January 17 to cut production to support prices. Oil exports constitute around 37 percent of Egypt’s export and hence, the trade balance is positively impacted by higher oil prices.
Moreover, the current account deficit recorded $71.5 million, an 81 percent improvement over the $379 million of the first quarter in FY00.On the other hand, capital and financial accounts posted $-0.7 billion during the first quarter of FY01 compared to $-0.2 billion in the comparable quarter of last year.
This deterioration in the capital account balance is partly attributable to a $1.1 billion outflow of other net assets and liabilities as banks replenish their positions in foreign assets. The overall balance improved by 45 percent to $-556 million compared to $1 billion in the year ago period.
All the above figures prove in line with Prime’s estimates for FY00 published in the Investment Strategy Egypt of August 2000.The one exception being GDP growth, which surpassed our 4.5 percent expectation.
Despite negative market conditions in 2000, the recently publicized CBE figures cast a more favorable light on the overall economic conditions in Egypt. Furthermore, the initialing of the EU partnership agreement and the recently announced Merril Lynch decision to raise Egypt’s recommended allocation from “Neutral” to “Overweight” prove positive indicators and should hence restore investor confidence. — ( Prime Securities S.A.E. )
© 2001 Mena Report (www.menareport.com)
