Egypt’s current account deficit for the 2017-18 financial year ended June 30 reduced by 58.6 percent to $6 billion, the central bank said on Monday. The country had reported a $14.4 billion deficit in the 2016-17FY.
The central bank attributed the improvement to the continuous positive impact of the currency liberalization decision, which the country took late 2016 as part of an International Monetary Fund (IMF)-backed economic reform programme.
“The services balance and net unrequited current transfers are the key drivers of the improvement in the current account,” a statement by the Bank said.
The Bank further stated that services surplus rose by 98.1 percent and net current transfers rose by 21.2 percent. Trade deficit stabilized at $37.3 billion. The capital and financial account unfolded a net inflow of $22 billion. “These developments resulted in an overall BOP[Balance of Payments] surplus of $12.8 billion in FY 2017/2018.” The BOP was $13.7 billion a year earlier.
Net foreign direct investment (FDI) for the 2017-18 financial year was $7.7 billion, mainly due to the net
investment of $ 4.5 billion in the oil sector. The net FDI figure was down from $7.9 billion in 2016-17. The trade deficit stood at $37.3 billion, compared with $35.4 billion for the 2016-17 financial year.
Portfolio investment retreated to a net inflow of $12.1 billion from $16 billion recorded a year earlier. This was mostly due to lower foreign investment in treasury bills.
However, remittances from Egyptians working abroad increased to $26.4 billion from $21.8 billion a year earlier.
The Monetary Policy Committee of the central bank decided to keep the Bank’s overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 16.75 percent, 17.75 percent, and 17.25 percent, respectively, as annual headline inflation rate rose to 14.2 percent in August compared to 13.5 percent in July.