Egypt's current account deficit narrows

Egypt's current account deficit narrowed to $1.382 billion in July to September 2019 from $2.012 billion in the same period a year earlier, central bank data showed.

Net foreign direct investment (FDI) inflows during the period, which is the first quarter of Egypt's 2019-20 financial year, rose to $2.353 billion from $1.415 billion a year earlier.

Barring its oil sector, Egypt had been struggling to attract FDI for years. Its non-oil FDI hit its lowest since 2014 in the third quarter of the 2018-19 fiscal year.

"FDI is almost double quarter-on-quarter and up 67 per cent year-on-year," said Allen Sandeep, head of research at Naeem Brokerage. The jump was "led by higher non-oil investments... a long awaited development, which is also a key performance indicator post-implementation of the tough economic reforms".

Since November 2016, Egypt has devalued the pound by about half, hiked fuel prices several times and introduced a value-added tax in reforms tied to a three-year $12 billion loan from the International Monetary Fund.

Travel revenues rose to $4.194 billion in the quarter from $3.931 billon a year earlier, indicating the tourism industry, a major source of foreign currency, remains robust. Tourism receipts are up significantly both quarter-on-quarter and year-on-year," said Sandeep. "Looks like it's going to be another record year if it continues this way."

The trade deficit narrowed to $8.783 billion from $9.813 billion. The non-oil trade deficit also narrowed to $8.177 billion in the quarter from $9.207 billion a year before.

"Non-oil exports are up by more than 17 per cent, which is very good," Sandeep said, adding that more exports and declining imports led to the improvement.