Weak tourism, remittances hurt Egypt
Cairo, September 25, 2013
Egypt's non-oil imports fell sharply in the second quarter, but tourism receipts and worker remittances together fell by even more, causing the country's current account deficit to widen, according to central bank figures released on Tuesday.
The current account deficit in the April-June quarter widened to $1.70 billion, an increase of $160 million from the same quarter of 2012, according to a balance of payments statement posted on the bank's website.
Tourism, which had been gradually improving since Egypt's 2011 popular uprising caused it to collapse, was dampened during the quarter by boiling political tension in the lead-up to the army's ouster of Islamist President Mohamed Mursi on July 3.
It was also harmed when 19 tourists were killed in the crash of a hot-air balloon in February and by the appointment in mid-June of a governor to Luxor who was a member of a hardline Islamist group connected to the 1997 massacre of 58 tourists.
Tourism receipts tumbled to $1.67 billion in the second quarter, a decline of $663 million from a year earlier.
Remittances from Egyptians working abroad fell, perhaps because workers transferred their funds through unofficial channels to take advantage of a black market in foreign currency, one economist said.
Net private transfers, which the central bank said are made up mainly of worker remittances, fell to $4.65 billion for the second quarter, a drop of $351 million.
The Egyptian pound was fetching as much as 7.60 to the dollar on the market compared to less than 7.00 on the official market.
Imports fell after the Mursi government, squeezed for cash in its final months, suspended wheat purchases from abroad from mid-February to July. Non-oil imports fell to $10.98 billion, a decline of $587 million.
Oil exports for the quarter fell by $771 million on a year earlier, but this was largely cancelled out by a $615 million fall in oil imports.
Reuters calculated the quarterly figures by subtracting figures for the first three quarters of the fiscal year from the central bank's full-year figures. The fiscal year begins on July 1 and ends on June 30.
For the whole of the 2012/13 year, the current account narrowed to $5.58 billion from $10.15 billion a year earlier, the bank said.
Foreign direct investment into Egypt in the 2012/13 year fell to $3.00 billion from a revised $3.98 billion a year earlier. The central bank last year had put 2012/13 FDI at only $2.08 billion, but revised it to reflect new figures from the petroleum sector, it said.
During the April to June quarter, FDI fell to $1.63 billion, a decline of $232 million from the same quarter in 2012. -Reuters
More Finance & Capital Market Stories
- GCC insurance growth outpaces developed markets
- Bahrain 'faces budget deficit, inflation challenges'
- Global Payment Services wins key certification
- BBK unveils big India expansion plans
- Kuwait GDP growth to hit 3.5pc in 2014
- Gulf shares tumble over EM exposure cut
- GCC bonds to gain from macro-economic climate
- French Business Council Dubai members up 18pc
- Egypt economy growth seen less strong than thought
- Sharjah approves $4.2bn budget for 2014
- Saudi non-oil sector posts solid growth in Feb
- Seera total income rises to $34m
- NBAD approves 40pc cash dividends
- NBAD sees 8-10pc loan growth
- Al Basel Group launches investment arm
- Union Insurance posts $18m profit
- Oman warns banks on conflicts of interest
- Japan to lend Tunisia $480m
- 400 to join anti-laundering seminar in Riyadh
- Lebanese insurer to head Prague Club
- UAE's first REIT plans $135m IPO
- Bahrain banking industry outlook 'positive'
- New India Assurance opens Bahrain branch
- Qatar sets up mixed business incubator
- Kuwait budget spending up 8pc in April-Jan
- Thomson Reuters to host Mena IFR awards
- ADIB offers smartphone industry investment
- Gulf Finance House to start $3bn Tunisia project
- KFH completes ICT project upgrade
- Egypt urban annual inflation slows to 9.8pc