Egypt’s account deficit increased, following Suez revenue plummet

Egypt’s account deficit has further increased to $5.9 billion in July-September 2024, compared to the $2.8 billion deficit in the year-ago quarter. This is according to a statement made by the Central Bank of Egypt on 16th January, Reuters reports.

This comes following news of Suez Canal revenues plummeting by 61.2% in the fiscal first quarter, which began July 1st. This decrease took revenues from $2.4 billion last year, to $931.2 million.

This also comes after Egypt’s signing of an IMF financial support package worth $8 billion in March 2024, in an effort to repair the budget deficit.

The account deficit is likely due to disruptions in maritime trade routes, caused by conflicts between Iran-backed Yemeni Houthi militants and Israel. The number of ships passing through the canal has dropped by 51%, and tensions in the Red Sea have forced shipping companies to divert their routes.

The Houthis have reportedly been attacking vessels in the Red Sea, blocking ships from the canal, apparently in solidarity with Palestinians.

This is troubling, as the Suez Canal is crucial to revenue making, however, despite Egypt’s account deficit, there is also substantial good news pertaining to it’s economy.

For example, this dip in revenues from the canal has been offset by an almost doubled amount in remittances, from $4.5 billion in the July-September 2023 quarter to $8.3 billion.

Meanwhile, Egypt’s net foreign investments have risen from $2.3 billion to $2.7 billion, and the tourism industry has followed similar patterns of steady growth, with revenues rising from $4.5 billion to $4.8 billion in the same time period.

Egypt has also seen a lowered rate of inflation, in keeping with the aims of the 2024 IMF budget.

Reuters