Bal­ance of Pay­ments marks sur­plus of $13.7bn in FY 2016/2017: CBE


The Daily News Egypt - - Business - By Hos­sam Mounir

In the fis­cal year (FY) of 2016/17, Egypt’s Bal­ance of Pay­ments (BOP) ran an over­all surge of $13.7bn, of which $12.2bn were re­alised in Novem­ber/June 2016/17, fol­low­ing the Cen­tral Bank of Egypt’s (CBE) de­ci­sion of the ex­change rate lib­er­al­i­sa­tion against an over­all deficit of $2.8bn in the pre­vi­ous FY. Ac­cord­ing to a re­cent re­port by the CBE, this is be­cause the cap­i­tal and fi­nan­cial ac­count recorded a net in­flow of $29bn (against $21.2bn in the pre­vi­ous FY) and the cur­rent ac­count deficit nar­rowed by 21.5% to $15.6bn (from $19.8bn in the pre­vi­ous FY).

The Cur­rent Ac­count

The CBE stated that the cur­rent ac­count deficit fell by 21.5% to $15.6bn (from $19.8bn in the pre­vi­ous FY). The CBE noted that the deficit nar­rowed by13.1% in Oc­to­ber/De­cem­ber—by 37.7% in Jan­uary/March and by 50.0% in April/June, af­ter it had reg­is­tered a surge of 24.3% in July/Septem­ber 2016 (be­fore the lib­er­al­i­sa­tion de­ci­sion).

Trade Bal­ance

In FY 2016/17, the trade deficit de­clined by 8.4% to $35.4bn (from $38.7bn a year ear­lier) be­cause of the $3bn in­crease in mer­chan­dise ex­ports and the $265.6m de­cline in mer­chan­dise im­ports, ac­cord­ing to the CBE.

The re­port pointed out that mer­chan­dise ex­port pro­ceeds rose by 15.9% to $21.7bn (from $18.7bn in the pre­vi­ous fis­cal year), thanks to the rise in both non-oil and oil ex­ports.

The for­mer in­creased by 16.2% from $13bn to $15.1bn.

The CBE noted that this is re­flect­ing the im­prove­ment of the com­pet­i­tive­ness of Egyp­tian ex­ports im­me­di­ately af­ter the flota­tion de­ci­sion, adding that the lat­ter moved up by 15.4%, from $5.7bn to $6.5bn. Con­cur­rently, mer­chan­dise im­ports stepped down by 0.5% to reg­is­ter $57.1bn (against $57.4bn), as non-oil im­ports de­clined by 4.5% to $45.9bn (against $48.1bn last year).

Mean­while, oil im­ports in­creased by $1.9bn. It is note­wor­thy to state that the April/June 2017 shows the im­prove­ment in the trade deficit by 5.1%, to reg­is­ter $8.4bn (against $8.8bn), mainly due to the 7.4% rise in ex­port pro­ceeds and the 0.4% re­treat in mer­chan­dise im­ports.

Ser­vices Bal­ance

In FY 2016/17, ser­vices sur­plus picked up by 4.3%,to record $6.8bn (against $6.5bn a year ear­lier) on the back of sev­eral de­vel­op­ments.

The CBE stated that these de­vel­op­ments in­clude the rise in travel re­ceipts (tourism rev­enues) by 16.2% to $4.4bn, up from $3.8bn.

Tourism rev­enues reg­is­tered in­creases of 128.3% and 201.5% in Jan­uary/March and April/June 2017 re­spec­tively, af­ter fall­ing by 56.1% and 15.8% in July/Septem­ber and Oc­to­ber/De­cem­ber 2016.

The re­treat in travel pay­ments de­clined to only $2.7bn (from $4.1bn), on ac­count of the de­cline in e-card pay­ments abroad from $2.5bn to $1.6bn.

In April/June 2017, travel pay­ments no­tice­ably de­clined by 53.3%,thereby reg­is­ter­ing $550.2m (ver­sus $1.2bn) as a re­sult of the 70.7% fall in e-card pay­ments, to post $226.9m (against $774.6m).

More­over ,the CBE added that the Suez Canal re­ceives fell to $4.9bn (against $5.1bn). This came on the back of the fall in the value of Spe­cial Draw­ing Right (SDR) ver­sus the US dol­lar by an av­er­age of 1.9%, not­with­stand­ing the higher net ton­nage of tran­sit­ing ves­sels by 0.8%.

In­vest­ment In­come Bal­ance

In ad­di­tion, the CBE said that in­vest­ment in­come bal­ance ran a deficit of $4.4bn in FY 2016/17, pri­mar­ily be­cause in­vest­ment in­come pay­ments reg­is­tered $4.9bn (64.3% of which were trans­ferred by oil and non-oil for­eign com­pa­nies op­er­at­ing in Egypt) .In con­trast, in­vest­ment in­come re­ceived reg­is­tered a mod­est fig­ure of $497.9m.

Unrequited cur­rent trans­fers in FY 2016/17 inched up by 4.1% to reg­is­ter $17.5bn (ver­sus $16.8bn), be­cause of, mainly, to the in­crease in net pri­vate trans­fers from $16.7bn to $17.3bn, sup­ported by the in­crease in work­ers’ re­mit­tances to $17.5bn (from $17.1bn a year ear­lier).

It is worth not­ing that work­ers’ re­mit­tances in­creased in Novem­ber/June 2016/17 (the pe­riod fol­low­ing the flota­tion of the pound) by $1.4bn to $12.8bn (against $11.4bn in the cor­re­spond­ing pe­riod a year be­fore).

Cap­i­tal and Fi­nan­cial Ac­count

Reg­is­ter­ing a net in­flow of $29bn in FY 2016/17 (against $21.2bn), the cap­i­tal and fi­nan­cial ac­count sig­nalled the grow­ing con­fi­dence in the Egyp­tian econ­omy, es­pe­cially af­ter ini­ti­at­ing the eco­nomic re­forms, mainly the lib­er­al­i­sa­tion of the Egyp­tian pound.

The CBE high­lighted the main de­vel­op­ments in the cap­i­tal and fi­nan­cial ac­count that took place in FY 2016/17, as com­pared to FY 2015/16, which in­cluded the to­tal in­flows of for­eign di­rect in­vest­ments (FDI) in Egypt. This fig­ure rose by 6.5% to $13.3bn (from $12.5bn), while to­tal out­flows recorded $5.4bn against $5.6bn. Ac­cord­ingly, the CBE noted that net in­flows of FDI in Egypt rose to $7.9bn, against $6.9bn, as a di­rect re­sult of the $2.3bn rise in net in­flows for oil sec­tor in­vest­ments, to post $4bn (against $1.7bn).

The in­vest­ment port­fo­lio in Egypt aug­mented in FY 2016/17 and un­folded, as such, a net in­flow of $16bn (against a net out­flow of $1.3bn). The CBE at­trib­uted to the rise in for­eign­ers’ in­vest­ments in Egyp­tian trea­sury bills, record­ing net pur­chases of $10bn. More­over, the Egyp­tian gov­ern­ment floated bonds in in­ter­na­tional mar­kets, in the pe­riod fol­low­ing the lib­er­al­i­sa­tion of the ex­change rate, where for­eign­ers’ in­vest­ments ac­counted for $6.8bn. In ad­di­tion, for­eign­ers’ in­vest­ments in the Egyp­tian Ex­change (EGX) rose in FY 2016/17 to reg­is­ter net pur­chases of $497.3m (against $157.1m).

Other as­sets and li­a­bil­i­ties re­alised a net out­flow of $2.5bn (against a net in­flow of $8.5bn). This came on the back of the rise in banks’ for­eign as­sets and for­eign cur­rency re­sources im­me­di­ately af­ter the lib­er­al­i­sa­tion of the ex­change rate.

As such, banks’ for­eign as­sets rose by $9.5bn, and their for­eign li­a­bil­i­ties by only $1.4bn.


The CBE stated that the cur­rent ac­count deficit fell by 21.5% to $15.6bn (from $19.8bn in the pre­vi­ous FY)

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