CBE: Egypt’s Current Account Deficit Narrows to $3.2 Billion in Q1 of FY2025/26

Egypt’s external accounts showed marked improvement in the first quarter of the 2025/2026 fiscal year, as the current account deficit narrowed by 45.2% to $3.2 billion, down from $5.9 billion in the same period a year earlier, according to a statement released by the Central Bank of Egypt (CBE) on Wednesday.

The improvement reflects stronger inflows from remittances, tourism, and Suez Canal revenues, alongside a modest reduction in the non-oil trade deficit, signaling growing resilience in Egypt’s balance of payments.

The CBE attributed the sharp decline in the current account deficit primarily to a 28.4% rise in net unrequited current transfers, which reached $10.7 billion, driven largely by increased remittances from Egyptians working abroad.

In parallel, the services balance surplus expanded by 23.4% to about $5 billion, supported by higher tourism revenues and increased Suez Canal transit fees.

Tourism revenues rose 13.8% year-on-year to $5.5 billion, as the number of tourist nights climbed to 58.7 million, compared with 51.6 million in the same period last year.

Suez Canal revenues increased 12.4% to $1.05 billion, reflecting a 2.5% rise in transiting vessels to around 3,300 ships, and an 8.6% increase in net tonnage to 138.1 million tons.

The non-oil trade deficit narrowed by $390 million to $9.5 billion, as non-petroleum exports surged by $1.9 billion to reach $9.8 billion. Export growth was led by shipments of gold, household electrical appliances, fresh and processed vegetables, fruits, and ready-made garments.

However, non-oil imports also rose by roughly $1.5 billion, reaching $19.3 billion, driven by higher purchases of passenger cars, auto parts, corn, polypropylene polymers, and mobile phones.

Despite the overall improvement, pressures persisted from the oil trade balance, where the deficit widened by $946.6 million to $5.2 billion, largely due to higher petroleum imports.

Oil imports climbed by nearly $1 billion to $6.4 billion, reflecting increased purchases of natural gas and crude oil, while imports of refined petroleum products declined. Oil exports edged up modestly to $1.3 billion, supported by higher exports of petroleum products and natural gas.

The deficit in the investment income balance also widened slightly by 2.3%, reaching $4.4 billion, as investment income payments doubled to nearly $5 billion, outweighing a decline in income receipts.

On the capital and financial account, Egypt recorded a net outflow of $366.4 million, compared with a net inflow of $3.8 billion in the same period last year. The shift was mainly due to a $5.3 billion increase in foreign assets held by Egyptian banks abroad.

Nevertheless, foreign direct investment (FDI) remained resilient, posting a net inflow of $2.4 billion, slightly below last year’s $2.7 billion.

FDI into the oil and mining sector recorded a modest net inflow of $9.3 million, reversing an outflow in the previous year, while non-oil sectors attracted $2.4 billion, driven by reinvested earnings, capital increases in existing firms, new company formations, and real estate purchases by non-residents.

Portfolio investments also rebounded, registering a net inflow of $1.8 billion, compared with an outflow of $384.7 million a year earlier.

Despite the improvement in the current account, Egypt’s overall balance of payments recorded a deficit of $1.6 billion, compared with $991 million in the same period of the previous fiscal year.