Where Do the Flowing Dollars Go?

Last week, we highlighted the main sources of Egypt’s foreign currency revenues, which stem from five key sectors. The largest contributor is remittances from Egyptians abroad, amounting to $33 billion, while the smallest—temporarily—was revenues from the Suez Canal, at around $4 billion.

There are also other resources, such as loans, foreign aid, portfolio investment (the stock market), payments for Egyptian services, visa fees, property sales, and so on. However, these sources are neither sustainable nor stable, and some of them do not generate significant amounts.

But where do these dollars go? Who controls them? And how stable and sustainable are they?

In economic terms: what are the uses of these foreign currency resources—primarily the US dollar?

To begin with, it must be stressed that the Egyptian economy is now on the verge of emerging from the bottleneck it has been stuck in during the past four years, due to both external and internal factors.

Signs of recovery include improved foreign currency inflows into the Egyptian market, healthier macroeconomic indicators, and an early rise in GDP growth rates. Importantly, Egypt continues to meet its external obligations, most notably by consistently servicing its external debt—both principal and interest—on schedule.

It should also be noted that most of Egypt’s foreign currency resources are influenced by political and geopolitical factors, as well as by global confidence in the Egyptian economy’s ability to correct itself, sustain gradual growth, and maintain political and economic stability, with steady fiscal and monetary policies.

Thanks to these factors, remittances from Egyptians abroad have returned to their previous levels. At the same time, exports rose to $24.5 billion in the past six months, while tourism revenues reached $9 billion. Foreign direct investment is expected to climb from $10 billion last year to over $16 billion by the end of this year, and Suez Canal revenues are projected to rise from $4 billion to more than $7 billion.

Overall, Egypt now enjoys a more balanced position between its foreign currency needs and resources. Net foreign assets at the Central Bank and local banks have turned from deficit into surplus, generating a reasonable buffer.

This is why Prime Minister Mostafa Madbouly recently stated that Egypt’s resources had fully covered its dollar needs over the past two months. But the question remains: where did these dollars go, and how were they used?

The largest share was allocated to cover imports, which reached $72 billion last year but have since started to gradually decline on a monthly basis. Another major portion went to servicing external debt, where Egypt paid around $39 billion last year in principal and interest.

Other uses included:

- Meeting individual needs during Umrah and Hajj seasons (around 350,000 pilgrims for Umrah and 80,000 for Hajj, requiring about $1.5 billion),

- Profit repatriation by foreign investors (both direct and portfolio),

- Egyptians’ expenses for overseas tourism, education, and healthcare,

- Payments of Egypt’s membership contributions to certain international organizations.

It is evident that the two main uses are imports and debt service. The first cannot be reduced without advancing “industrial localization” and continuing agricultural expansion. The second—debt servicing—cannot be neglected, and Egypt is expected to finish paying its external debt installments by 2046–2047, provided there are no new borrowings.

Imports include four main categories essential to local production and exports: food, medicines, machinery and equipment, and raw materials. Last year, for example:

- 25% of imports were mineral and chemical products,

- 24% agricultural products (wheat, corn, meat, etc.),

- 15% machinery and equipment,

- 13% basic metals.

Specifically, Egypt imported in the past year:

- Around $8.56 billion worth of wheat, corn, and soybeans,

- Refined petroleum worth nearly $8.5 billion,

- Packaged medicines exceeding $2.5 billion,

- Natural gas valued at around $3 billion, with prospects of further increase this year.

For context, Egypt consumes roughly 20 million tons of wheat annually, producing half domestically, while importing the rest mainly from Russia, Ukraine, the U.S., France, and Romania. Fortunately, global wheat prices fell from $450 to $300 per ton.

Imports are sourced mainly from:

- Arab countries (oil and gas),

- The European Union ($22.5 billion),

- The United States ($8 billion+),

- Russia ($6 billion),

- China ($2.5 billion).

As for debt service, Central Bank reports show that by June, Egypt’s external obligations stood at:

- $31.1 billion in loan installments,

- $6.3 billion in interest payments,

- $907 million in currency swap contracts,

- $1.9 billion under repo agreements.

All of these were paid on time. However, total debt service obligations between January and year-end are projected to reach $44.5 billion, broken down as follows:

- $10.5 billion owed by the government,

- $21.2 billion by the Central Bank,

- $8.1 billion by commercial banks,

- $3.5 billion by other sectors.

In conclusion:

While Egypt’s economic situation has improved, greater effort is still needed, particularly in industrial and agricultural expansion. These are the best ways to cover domestic needs, boost exports, create jobs, lower inflation, and reduce prices of goods and services.

In parallel, Egypt must work on increasing tourist inflows, enhancing the investment climate, and restoring Suez Canal revenues to pre-Red Sea crisis levels (around $10.5 billion).

Most importantly, industrial localization and agricultural expansion are areas where Egypt has relative control, unlike many external sources of foreign currency, which remain vulnerable to global shocks.

May God safeguard Egypt, and may the future hold even better prospects.