Egypt’s current account deficit has continued to improve for the third consecutive quarter (Q), declining by 39.2% in Q1 of 2020, according to the Central Bank of Egypt (CBE).

The improvement comes despite the uncertainty in the global economy which has resulted from the spread of the novel coronavirus (COVID-19) pandemic.

According to the CBE, the improvement was particularly pronounced in Q1 of 2020, with the account deficit now standing at $2.8bn. This is a significant improvement on the $4.5bn reported during the same period in the previous fiscal year (FY).

Thus, the cumulative period from July to March in FY 2019/20 recorded a marked improvement of 25.2%, to reach $7.3bn, down from about $9.8bn a year earlier.

The notable performance can mainly be attributed to improvements in the non-oil trade balance deficit and the increase in current transfers, particularly remittances.

The CBE added that the improvements are the result of the economic reforms introduced by the Egyptian government in 2016, and which have continued to drive macroeconomic indicator improvements.

Additionally, Egypt’s capital and financial account of the balance of payments was clearly affected during Q1 of FY 2019/20, which recorded a net outflow amounting to approximately $1.1bn.

However, the cumulative period between July and March of FY 2019/20 recorded a net inflow of about $4.1bn, benefiting from the inflows achieved during the first half (H1) of the current fiscal year.

The CBE noted that, in terms of the balance of payments, Egypt was able to absorb the unfavourable shockwaves that rippled out due to the pandemic. This has been represented by an overall deficit that reached roughly $5.1bn from July to March in FY 2019/20 after it had achieved an overall surplus of $410.9m during the July-December period of the same fiscal year.