Egypt Narrows Balance of Payments Deficit to $1.8 Billion as Remittances Surge

Stronger worker remittances and improved external flows help ease pressure on Egypt’s external accounts, according to Central Bank data.

Egypt’s overall balance of payments deficit narrowed by 2.9% year-on-year during the first nine months of the 2025/2026 fiscal year, reaching approximately $1.8 billion, compared with $1.9 billion during the same period a year earlier, according to data from the Central Bank of Egypt (CBE).

The improvement was supported by a strong increase in remittances from Egyptians working abroad, which continued their upward trajectory throughout the period.

Workers’ remittances rose by 31.2% between July 2025 and May 2026, reaching around $43.1 billion, compared with $32.8 billion during the corresponding period of the previous fiscal year.

On a monthly basis, remittance inflows increased by 13.5% in May 2026 to approximately $3.9 billion, up from $3.4 billion in May 2025, highlighting the continued importance of overseas transfers as a key source of foreign currency for the Egyptian economy.

The International Monetary Fund (IMF) said its recent agreement with Egypt would pave the way for the release of approximately $1.6 billion under the country’s financing programs.

The package includes around $1.5 billion under the Extended Fund Facility and approximately $136 million through the Resilience and Sustainability Facility, bringing total disbursements under both programs to around $7.2 billion following approval by the IMF Executive Board.

The IMF said the impact of regional geopolitical tensions on Egypt’s economy has remained "relatively limited" due to swift government measures, including adjustments to fuel and electricity prices, energy conservation measures in public institutions, and the reprioritization of government spending.

However, the fund noted that Egypt continues to face challenges from regional instability, particularly given the country’s reliance on foreign portfolio investment inflows and imported natural gas to meet energy needs.

The IMF reported that Egypt’s real gross domestic product expanded by 5% in the third quarter of the fiscal year, lifting growth during the first nine months to 5.2%.

Despite stronger economic activity, inflation remains elevated. Urban consumer price inflation stood at 14.6% in May, with the IMF projecting that it could reach 15.8% by the end of the fiscal year.

The IMF emphasized the importance of maintaining a tight monetary policy stance to contain renewed inflationary pressures, while preserving exchange rate flexibility as a key mechanism for absorbing external shocks, including those linked to rising geopolitical risks.

The fund also noted that Egypt’s fiscal performance remained strong, with the government exceeding targets for both the primary surplus and tax revenues through the end of March.

The IMF expects Egypt’s primary surplus to increase to 5% of GDP in fiscal year 2026/2027, compared with an estimated 4.8% in fiscal year 2025/26, reflecting continued efforts to strengthen public finances and improve economic resilience.