Egypt’s current account deficit widens to $4.98b

cairo — Egypt’s current account deficit widened to $4.98 billion in the first quarter of the 2016/17 financial year from a deficit of $4 billion in the same period a year earlier, the central bank said in a statement on Thursday.

The overall balance of payments was in surplus to the tune of $1.9 billion compared to a deficit of $3.7 billion in the same period a year earlier, the statement said. The growth in the current account deficit was partly the result of a 50.2 per cent decline in the services surplus, which suffered a 56.1 per cent drop in tourism revenues to $758 million.

Another factor was a decline in net transfers to $3.39 billion from $4.32 billion in the same period a year earlier. The number is made up almost entirely by net private transfers, which fell sharply because of a 22.3 per cent drop in workers’ remittances.

The trade deficit narrowed by 13.4 per cent to $8.7 billion, the central bank said.

Net inflows of foreign direct investment rose to $1.9 billion from $1.4 billion. Portfolio investment in Egypt registered a net outflow of $841 million compared to an outflow of $1.4 billion in the same period last year.

Due to new deposits from some Arab countries, the external liabilities of the central bank jumped to $3.4 billion from $1.2 million in the same quarter a year earlier, central bank data showed.

The central bank kept its key interest rates unchanged on Thursday. The Monetary Policy Committee kept the overnight deposit rate at 14.75 per cent and the overnight lending rate at 15.75 per cent, the bank said in a statement, as predicted by seven out 11 economists polled by Reuters this week.

The bank had already raised rates by a cumulative 550 basis points this year.