Egypt's current account deficit narrowed to $1.382 billion from July to September 2019 from $2.012 billion in the same period a year earlier, according to Egypt's Central Bank’s data.
Net foreign direct investment (FDI) inflows during the period, Q1 of 2019-2020 fiscal year, rose to $2.353 billion from $1.415 billion a year earlier.
Excluding its oil sector, Egypt had been struggling to attract FDI for years. Its non-oil FDI hit its lowest since 2014 in Q3 of the 2018-2019 fiscal year.
Head of research at Naeem Brokerage, Allen Sandeep explained that FDI is almost double quarter-on-quarter and up 67 percent year-on-year.
Sandeep explained that the increase was “led by higher non-oil investments ... a long-awaited development, which is also a key performance indicator post-implementation of the tough economic reforms.”
Since November 2016, Egypt has devalued the pound by about half, hiked fuel prices several times and introduced a value-added tax in reforms tied to a 3-year $12 billion loan from the International Monetary Fund (IMF).
Tourism revenues rose to $4.194 billion in the quarter from $3.931 billion a year earlier, indicating the tourism industry remains robust.
“Tourism receipts are up significantly both quarter-on-quarter and year-on-year,” said Sandeep, predicting another record year if it continues this way.
The trade deficit narrowed to $8.783 billion from $9.813 billion. The non-oil trade deficit also narrowed to $8.177 billion in the quarter from $9.207 billion a year before.
Saneep also noted that non-oil exports are up by more than 17 percent, which is very good, adding that more exports and declining imports led to the improvement.
“Indirectly, this partly also explains the reason for the Egyptian pound appreciation during the period,” he said.
The Egyptian pound has strengthened more than 10 percent against the dollar in 2019.
The Bank's data also showed receipts from the Suez Canal increased slightly to $1.507 billion from $1.441 billion a year before.
Remittances from Egyptian workers abroad rose to $6.713 billion from $5.909 billion a year before. Foreign portfolio investments recorded an outflow of $1.982 billion, down from an outflow of $3.240 billion a year prior.