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Egypt Current Account Balance
The current account balance for more than forty years--except
during the two depressions of 1968 and 1973 following war with
Israel--was in the red, as was the merchandise trade balance, but
the current account deficit was smaller. The accumulated deficit
from 1950 through 1967 came to ŁE993 million. The first serious
jump, however, took place in 1975, when the current deficit rose to
US$1.56 billion from US$0.36 billion the previous year, reflecting
an increase in imports because of the oil boom. Between 1982 and
1988, the current deficit averaged US$3.6 billion, or about 9
percent of GDP. This occurred in spite of the steady rise in income
from exogenous resources. There were years in which the deficit was
lowered because of the large inflow of foreign currency, such as in
1983 when it fell to about US$2.4 billion from US$3.1 the previous
year, thanks to a rebound in remittances, but the overall trend was
for it to rise. In 1985 the current account deficit soared to about
US$4.7 billion or 14.3 percent of GDP. This deficit increase
compelled the government to impose restrictions on imports by
temporarily suspending the own-exchange (that is, foreign exchange
supplied directly by the importer rather than through commercial
banks; much foreign exchange in Egypt circulated outside formal
channels) import system to ameliorate the deficit. In part as a
result of policy and in part because of the lack of foreign
exchange, imports were subsequently reduced, and the deficit
improved. In 1988 it was slightly more than one-half of the 1985
deficit and the equivalent of 6.6 percent of GDP. Much pressure was
being exerted on the government, especially because of the
tremendous accumulated debt, to lower the annual deficit further,
if not to shift to a positive balance of payments
(see Debt and Restructuring
, this ch.).
Data as of December 1990
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