Egyptian Remittances Soar to $2.7 Billion in May

Egyptian remittances from workers abroad have continued to rise following the devaluation of the Egyptian pound in March, providing much-needed foreign currency in light of the country's recent economic challenges.

The Central Bank of Egypt revealed that remittances from Egyptians working abroad in May 2024 rose to approximately $2.7 billion, a 73.8% increase compared to the same month in 2023. On a monthly basis, remittances increased by 26.6% from April 2024, when they totaled around $2.2 billion. This surge is attributed to a package of economic reforms initiated on March 6, 2024.

Remittances from Egyptians abroad are a crucial source of foreign currency for the government, alongside revenue from the Suez Canal, tourism, and exports.

Additionally, the Central Bank reported that deposits in local banks reached approximately 9.5 trillion Egyptian pounds by the end of June 2023, reflecting a 10.4% growth in the first half of 2023. Banking sector assets also increased to 15.429 trillion pounds by the end of February 2024, up from 14.2 trillion pounds at the end of December 2023, an increase of 1.2 trillion pounds.

Bank reserves rose to 628.3 billion pounds at the end of February, compared to 476.4 billion pounds at the end of the previous year. Lending balances reached 5.642 trillion pounds by the end of February 2024, up from 5.286 trillion pounds at the end of last year.

Mohamed El-Etreby, Chairman of the Federation of Egyptian Banks and Chairman of Banque Misr, highlighted the recent surge in foreign currency remittances to Egypt, not only from Egyptian expatriates but also from foreign investors and international institutions eager to invest in local treasury bonds. This indicates a renewed confidence in the Egyptian economy following the Central Bank’s bold decisions to enhance exchange rate flexibility and control inflation, placing it on a downward trajectory.

El-Etreby noted that the Central Bank’s measures have stabilized the foreign exchange market and improved the outlook of international institutions on the Egyptian economy. Moody’s recently upgraded its outlook on Egypt’s economy and its five largest banks from negative to positive.

Banque Misr reported a more than tenfold increase in remittances from Egyptians abroad, and its exchange company saw a twentyfold rise in dollar inflows compared to previous periods. This has enabled the bank to clear all foreign currency waiting lists in recent days.

Banking expert Magdy Fahmy stated that the increase in remittances reflects international confidence in Egypt’s economic stability, despite ongoing crises, and demonstrates the trust of Egyptian expatriates in their home country’s economy. He emphasized that remittances are Egypt’s second-largest source of foreign currency after exports.

Fahmy predicts that remittances will continue to rise due to the higher exchange rate for the dollar against the pound and the elimination of the black market, encouraging more expatriates to send money home.

Banking expert Dr. Ahmed Shawky highlighted the factors contributing to the rise in remittances, which have reached $22 billion. He noted that remittances are the second-largest and least costly source of foreign currency for Egypt, and efforts are underway to further support this flow.

Shawky mentioned that the Egyptian state has launched the "InstaPay" platform to facilitate remittances from surrounding countries, reducing high commission fees that exceed 5%. The goal is to lower these costs to under 5%, with the current rate at 3%.

Additionally, the Central Bank has collaborated with neighboring countries through the Arab Monetary Fund’s "Buna" platform, which handles digital or financial transfers across Arab states. High-yield certificates have also been issued to attract dollar deposits, and efforts to reduce transfer fees with other banks and institutions have been made.