RIYADH: Egypt’s current account deficit narrowed 13.6 percent in the first half of the financial year 2025/2026 to reach $9.5 billion, new figures showed.
Data from the country’s central bank showed the improvement was driven by a 28.4 percent rise in net unrequited current transfers, which reached $22 billion between July and December.
This aligns with S&P Global’s decision earlier this week to affirm Egypt’s sovereign credit ratings at “B/B” with a stable outlook, citing strong momentum in macroeconomic reforms and improved external buffers.
In its latest report, the credit rating agency stated that the affirmation reflects a balance between Egypt’s reform progress over the past two years, its external buffers, and its medium-term growth outlook, against heightened risks from prolonged regional geopolitical tensions.
“This increase was primarily driven by the surge in the remittances of Egyptians working abroad. In addition, the services balance rose by 20.6 percent, recording a surplus of $8.9 billion, supported by the growth in both tourism revenues and Suez Canal transit receipts,” the newly released statement said.
“On the other hand, the capital and financial account recorded a net inflow of $6.5 billion during the period under review, as foreign direct investment in Egypt registered a net inflow of $9.3 billion, mainly driven by the inflows during the period October/December 2025 due to the conclusion of the Alam El-Roum deal valued at $3.5 billion,” it added.
The data further showed that portfolio investments in Egypt posted a net inflow of $5 billion from July to December compared to a net outflow of $3.2 billion in the same period in 2024, while banks’ foreign assets abroad rose by $9.7 billion.
The balance of payments recorded an overall deficit of $2.1 billion during the first half of the financial year 2025/2026, widening from a deficit of $502.6 million.
The capital and financial account recorded a net inflow of $6.5 billion during the reporting period, compared with a net inflow of $8.9 billion during the same period of the previous financial year.
This was mainly attributed to FDI net inflow of $9.3 billion in the period between July and December against $6 billion in the corresponding period a year prior, a $5 billion net inflow in portfolio investment against $3.2 billion previously, and a net outflow of $9.7 billion in the change in banks’ foreign assets.
The net inflow in the capital and financial account was also supported by lower external borrowing, as medium- and long-term loans and facilities recorded a net repayment of $380.7 million in the first half of the 2025/2026 financial year, compared with $2 billion in the same period a year earlier.
Total disbursements fell to $3.5 billion from $5.7 billion, reflecting reduced reliance on external financing during the period.
The net inflow in capital and financial account was also due to a net outflow of $435.1 million in the change in the central bank’s liabilities between July and December, against a net inflow of $704.5 million in the same months of 2024.
