Egypt Current Account Deficit Narrows, Inflation Falls

Egypt’s current account deficit narrowed to $1.6 billion in the first quarter of the 2017/18 financial year from a deficit of $4.8 billion in the same period a year earlier, the central bank said in a statement on Sunday.

The overall balance of payments surplus was $5.1 billion compared to $1.9 billion in the same period a year earlier, the statement said, according to a Reuters report.

Egypt’s economy has been struggling since a 2011 uprising drove tourists and foreign investors away, but a $12 billion International Monetary Fund deal signed last year is hoped to put the country back on track.

The trade deficit narrowed by 5%, reaching $8.9 billion from $9.4 billion the previous year due to a rise in exports, the statement said. Oil exports rose by 16.8% while non-oil exports by 8.6%.

“Net inflows of foreign direct investment in Egypt registered $1.6 billion, as a direct result of the 84.2% rise in the net inflow for oil sector investments,” the statement said.

Portfolio investment net inflows rose to $7.5 billion against a net outflow of $840.9 million the previous year, due to a hike in foreign investment in Egyptian debt.

Foreign investment in Egyptian securities hit $19 billion as of December 6 since the flotation of the pound currency in November 2016, finance minister, Amr El Garhy, said.

Egypt floated the pound as part of a $12 billion International Monetary Fund loan aimed at reviving its economy which has struggled since a 2011 uprising.

Egypt’s central bank has raised key interest rates by 700 basis points since it floated the pound currency last year, generating appetite for Egypt’s debt.

Meanwhile, Egypt’s inflation in November fell to a 2017 low a year after the country floated its pound currency as part of the International Monetary Fund deal to boost the economy.

Inflation has shot up since the pound’s flotation last November, reaching a record high in July on the back of energy subsidy cuts, but has gradually eased since.

Annual urban consumer price inflation eased to 26% in November from 30.8% the previous month, official data showed on Sunday. Core inflation, which strips out volatile items such as food, fell to 25.53% from 30.53%.

Egypt’s finance minister said on Sunday that he expected inflation to reach 20% by January and 13-14% by August.