Egypt’s current account deficit more than doubled to $8.9 billion in the July-December first half of the 2015/2016 financial year, the central bank said in a statement on Wednesday.
Egypt devalued the pound this month as it wrestles with a shortage of dollars in the wake of the 2011 uprising that drove away tourists and foreign investors, two big sources of hard currency.
That may encourage foreign investment but it also drives up the country’s large import bill and widens the deficit on its current account, the broadest measure of its trade with the rest of the world.
The widening deficit in the first half of the fiscal year that began last July was driven partly by a decline in net transfers, which fell to about $3.99 billion in the second quarter from $5.797 billion in the same period a year earlier.
Net official transfers, including cash and commodities, tumbled to $10.3 million in the second quarter from $1.13 billion in the same period a year earlier. Official transfers refer to money coming into or out of the country, such as grants.
Saudi Arabia, the United Arab Emirates and Kuwait have given around $35 billion in aid to Egypt in the form of oil shipments, cash grants and deposits in Egypt’s central bank since the army deposed Islamist president Mohamed Mursi in 2013 following protests.
Another factor affecting the current account was a steep decline in the services surplus, which fell to $543.7 million from $1.9 billion in the same period a year earlier, Reuters calculation showed.
The overall current account deficit in the first half the previous year came to $4.3 billion, the central bank said.
For the three months to the end of December, the gap came to $4.94 billion, compared with $2.68 billion in the same period a year earlier, Reuters calculations showed.
Tourism revenues, a major source of hard currency for Egypt, fell to $981 million in the second quarter from $1.92 billion in the same period a year earlier.
Egypt’s tourism sector has been ravaged by years of political turmoil since the revolution that ousted veteran president Hosni Mubarak in 2011. The tourism industry took another blow when a Russian airline was brought down by a bomb late last year.
The country saw its foreign currency reserves tumble to $16.5 billion in February from around $36 billion in 2011.
Foreign direct investment rose to $1.7 billion in the second quarter from $1.2 billion in the same period a year earlier, Reuters calculations showed.
The trade deficit narrowed to $9.48 billion in the second quarter from $10.39 billion a year earlier, with exports dropping to $4.48 billion in the second quarter from $6 billion in the same three months the year before.