Egypt’s fiscal position remains unstable

Despite marginal improvements in international reserves and foreign direct investment and the likely improvement in the balance of payments during the fourth quarter of the 2016 fiscal year, Egypt’s external payments position remains fragile, according to the latest report from Moody’s.

On 3 July, the Central Bank of Egypt (CBE) published a report on Egypt’s balance of payments position for the first three quarters of the fiscal year that ended on 30 June 2016. The report shows that Egypt’s economic position remains fragile due to external vulnerability and remaining structural weakness.

The current account deficit reached $14.5bn, up from $8.3bn the previous year, 6.7% and 5.3% of GDP respectively. The overall balance of payments deficit more than tripled to $3.6bn, up from $1bn.

“Although Egypt is a net oil importer, low oil prices do not benefit the country’s trade balance and have in fact affected oil exports more negatively than imports. Oil exports dropped to $1.1bn as of March 2016 from a peak of $3.6bn in December 2013, whereas oil imports fell to $1.6bn from $3.1bn during the same period,” says Steffen Dyck, VP-Senior Credit Officer at Moody’s and lead sovereign analyst for Egypt.