Egypt’s balance of payments (BoP) recorded a surplus of USD 1.9 bn in 1Q2016-17, driven primarily by a net inflow of USD 7.1 bn in the capital and financial account, the CBE reported. The trade balance in the three months ending September 2017 narrowed to USD 8.67 bn from USD 10.01 bn a year earlier as non-oil exports increased by USD 666.7 mn in 1Q2016-17 compared to a year earlier and oil imports fell by USD 227.2 mn y-o-y with the drop in oil prices globally. Non-oil imports fell by USD 583.3 mn, presumably due to the drop in economic activity, import restrictions and lack of FX availability at the time, as shown by the consecutive drops in PMI readings.

The current account deficit widened in 1Q2016-17 compared to the same period the previous year because of a 56.1% y-o-y drop in tourism revenues, which registered USD 758.2 mn after the number of tourist nights dropped by 61.3% y-o-y. On the face of it, a drop in remittances could be seen as a cause for concern: Transfers home from expats abroad fell 22.3% to USD 3.40 bn in the three months ending September, but, as long as no major shock hits the global economy, the figure should rebound gradually as Egyptian expatriates return to using formal banking channels to inject their funds back to Egypt given the FX rate adjustment, which took place in 2Q2016-17. There is evidence of this already, as the CBE announced that remittances in November 2016 have increased by 33.2% y-o-y following a 35.7% y-o-y increase in October. The EGP float should also contribute to a better reading in 2Q2016-17 with improved inflows.

Foreign companies operating in Egypt were able to repatriate profits of some USD 769 mn in the first quarter of the state’s current fiscal year, Al Borsa added.