Why has Egypt’s current account deficit increased last fiscal year?


The Central Bank stated that the current account deficit increased during the last fiscal year as a main outcome of the decline in the service balance surplus by 42.9%, to be limited to 5.1 billion dollars, compared to 9 billion dollars in the previous fiscal year, as a result of
1- Tourism revenues fell 50% to reach $4.9 billion, compared to $9.9 billion
2- Transportation receipts decreased by 4.5% to $7.5 billion, compared to $7.9 billion, as a result of the decline in airline company receipts, as well as port services receipts affected by the Corona pandemic.
3- The non-oil trade deficit increased by 16.7% to reach $42.1 billion compared to $36 billion, driven by an increase in non-oil imports by $8.2 billion to reach $62.1 billion, as a result of an increase in the imports of intermediate goods $3.3 billion, raw materials $736.3 million, and investment goods 529.3 million These inputs contribute to improving the growth rate of the Egyptian economy.
The rise in imports came at a time when exports increased by 2.2 billion dollars only to record 20.1 billion dollars, and most of the increase came in electrical appliances for home use, inorganic compounds, wires and cables.
4- The increase in the investment balance deficit by 9.2% to reach $12.4 billion, compared to $11.4 billion, contributed to the widening of the current account deficit, and its increase came as a result of:
A- Increasing investment payments by 676 million dollars to reach 13 billion dollars, reflecting the profits achieved on foreign direct investment, interests and distributions on foreign investments in Egyptian bonds and securities.
B – The decrease in the proceeds of investment income by about 396.2 million dollars to be limited to 572.9 million dollars due to the decrease in the interest on deposits abroad?

$1.9 billion surplus in Egypt’s balance of payments last fiscal year
The Central Bank revealed that the Egyptian economy’s transactions with the outside world during the last fiscal year achieved a total surplus of about one billion dollars, compared to a deficit of about 8.6 billion dollars during the previous fiscal year 2019/2020.
The Central Bank said that this is an indication of the ability of the Egyptian economy to recover quickly from crises that may face the global economy
He pointed out that this total surplus was achieved despite the rise in the current account deficit to about $18.4 billion, compared to about $11.2 billion during the previous fiscal year.
However, he mentioned that this rise is temporary and came as a main result of the noticeable drop in tourism revenues to less than half of what was achieved during the previous fiscal year, affected by the strong shock to international tourism following the pandemic, which the world is still suffering from.
This total surplus is due to the realization of the capital and financial account, a net inflow of about 23.4 billion, compared to about $ 5.4 billion during the previous fiscal year, in a reflection of the noticeable improvement in foreign investments in the stock portfolio due to the continuation of policies to facilitate global financial conditions despite the ongoing uncertainty. As a result of the Corona pandemic, which reflects the confidence of foreign investors in the strength of the Egyptian economy.

The article: Why did Egypt’s current account deficit rise last fiscal year? It was written in Al Borsa newspaper.