Egypt’s tourism receipts almost tripled and worker remittances rose in the last three months of its fiscal year, marking another step in the country’s economic recovery from a crippling dollar shortage.
Tourism revenue rose to $1.5 billion in the fourth quarter that ended June 30, from $510 million in the same period a year ago, according to initial central bank data that it shared with Bloomberg. Full-year receipts rose 16 per cent to $4.4 billion. Remittances grew 9 per cent to $4.8 billion in the fourth quarter, and rose 2 per cent to $17.4 billion for the year.
The data is further evidence of a gradual improvement in Egypt’s external finances since November, when authorities embarked on an economic program that included floating the currency and cutting subsidies as a prelude to securing a $12 billion IMF loan. The deficit in the current account, which measures incoming and outgoing goods, services and transfers, narrowed 12.4 per cent to $13.2 billion in the first nine months of the fiscal year.
“Egypt’s main foreign-currency earners are finally bouncing back, closing in on levels similar to those prevalent before the 2015-2016 crisis,” said Reham El Desoki, senior economist at regional investment bank Arqaam Capital.
Egypt’s tourism industry — centred on ancient cultural sites such as the pyramids at Giza and the temples of Luxor, as well as Red Sea beach resorts — is recovering slowly from a slump caused by the downing of a Russian passenger plane over Sinai in October 2015, which led Russia and other nations to ban flights to the tourism hub of Sharm Al Shaikh.
Tourism employed 773,000 people in 2016, or 2.9 per cent of Egypt’s workforce, according to the World Travel and Tourism Council. The number of people who benefit indirectly from the industry is much higher.
But while revenue is improving, it remains well below the $11.6 billion Egypt received in the fiscal year that ended June 30, 2010 — months before the ouster of President Hosni Mubarak that triggered years of economic and political instability.
About 3.5 million tourists arrived from January to June this year, compared to around 2.3 million in the same period last year, Cairo-based Al-Shorouk reported Tuesday citing tourism ministry figures.
The Egyptian pound has lost half of its value since the float in November. That, along with lower subsidies and an increase in value-added taxation, has propelled inflation to more than 30 per cent, squeezing households in a country where about half of the population live below or near the poverty line.
The central bank has raised interest rates 700 basis points, or seven percentage points, since November in an attempt to contain rising consumer prices. The measures helped attract $40 billion in investments and transfers from abroad, including receipts from exports and investors selling dollars to buy Egyptian assets, the central bank said last week.