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Tuesday, 1 December 2020

The pandemic hasn’t been kind to our current account

The pandemic hasn’t been kind to Egypt’s current account: Egypt’s current account deficit more than tripled to USD 3.83 bn in 4Q FY2019-2020 from USD 1.09 bn the year before as the pandemic dealt a heavy blow to the country’s sources of hard currency, according to Reuters’ calculations of central bank figures (pdf) released yesterday.

Tourism revenues nosedived. Revenues collapsed by more than 90% to just USD 305 mn, having brought in USD 3.18 bn in 4Q FY2018-2019. The industry came to a near standstill in the fourth quarter of the government’s fiscal year as international flights were grounded to prevent the spread of the virus. The Tourism Ministry said last month that the sector has brought in just USD 80-150 mn each month on average this year, a 85-92% drop from the USD 1 bn average last year.

Trade deficit widens despite hefty fall in imports: Falling exports resulted in the trade deficit widening to USD 8.41 bn from USD 8.29 bn during the quarter, even as imports dropped by 12% to USD 13.83 bn. Exports fell almost 30% y-o-y to USD 5.42 bn from USD 7.58 bn in 4Q FY2018-2019 thanks to the global economic slowdown.

Remittances slid during the quarter: Egyptian expats sent USD 6.21 bn back home during the three-month period, down 10% from the USD 6.94 bn in 4Q FY2018-2019. Many Egyptians are employed in Gulf Arab states, where oil revenues have declined.

Suez Canal revenues fell slightly to USD 1.34 bn from USD 1.46 bn in 4Q FY2018-2019, as the pandemic took its toll on global trade.

The capital account wasn’t spared either: Net foreign direct investment (FDI) fell to USD 1.52 bn from USD 1.71 bn during the quarter, after being on the uptick in the first half of the year, increasing by nearly 20% to USD 5 bn. Net portfolio investment tanked almost 80% to USD 636.8 mn from USD 3.18 bn the year before as investors scurried to pull their money out of emerging markets.

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