CAIRO: Egypt’s current account recorded a surplus in the first quarter of the financial year, boosted by billions of dollars in aid from Gulf Arab states after the army ousted Islamist president Mohammed Mursi in July.
The current account ran a surplus of $757m between July and September, driven by a massive increase in official transfers, according to a balance of payments statement posted on the central bank’s website yesterday.
Saudi Arabia, the United Arab Emirates and Kuwait pledged over $12bn in loans and donations, including petroleum products, after Mursi was forced out of office following mass protests against him. Egypt recorded a current account deficit of $1.26bn in the same period last year.
“Egypt did not usually have a surplus. In the current circumstances, it was definitely the Gulf money that made this shift,” said Mohamed Abou Basha, Cairo-based economist at EFG-Hermes.
Official transfers, including cash and commodities, shot up to $4.27bn in the first quarter of the financial year, which started on July 1, from $40m a year earlier, the central bank said.
Tourism, which had been gradually improving from a collapse following Egypt’s 2011 popular uprising, took another blow in the first quarter as many countries imposed travel bans on Egypt amid violent turmoil after Mursi’s removal. Tourism receipts tumbled to $931.1m down from $2.64bn a year earlier.
The number of tourist nights spent in Egypt fell by 57 percent to about 15 million and the average visitor’s spending also dropped, the central bank said in the statement accompanying the first quarter data. Oil exports for the first quarter rose by $347m to $2.79bn.
Foreign direct investment in Egypt rose to $1.246bn between July and September, up from $1.164bn last year. The central bank had previously put the figure for FDI in the first quarter of 2012 at $108m, but said data from the petroleum sector had prompted an adjustment.
Egypt has burned through at least $20bn — roughly half its reserves — supporting the currency since the 2011 uprising that overthrew Hosni Mubarak, which cut sharply into tourism revenues and foreign investment. Foreign reserves stood at $17.8bn at the end of November.
The central bank introduced dollar currency sales a year ago to help counter a run on the pound, which trades markedly below its official rate in the black market.
At a central bank currency auction yesterday, the dollar was sold at a cutoff price of 6.8972 pounds, while two market participants said the dollar was offered for 7.42 pounds in the black market.
Finance Minister Ahmed Galal said on Monday that the government will finance an economic stimulus package of around 30bn Egyptian pounds ($4.35bn) using aid from Gulf states and savings.
Portfolio investment in Egypt reversed to a net inflow of $1.27bn in the first quarter, from an outflow last year of $327m, which the central bank said was mainly due to the issuance of government bonds at a value of $1bn.
Net liabilities of the central bank increased to $3bn from $503m last year, mainly because of deposits transferred “from some Arab countries”, the statement said.
Reuters
