- Egypt's international reserves peaked at $36 billion in 2009-2010 but fell by $8 billion in 4 months after the 2011 revolution due to political and economic crises. The main sources of reserves are exports, Suez Canal revenues, tourism, remittances, and FDI. - Exports, Suez Canal revenues, tourism and remittances saw varying performance from 2010-2013, with tourism declining after the revolution. Imports have consistently exceeded exports, widening the trade deficit. - A weak economy, inflation, debt, and political instability have decreased the value of the Egyptian pound against the dollar over time.

1. Arab Academy for Science, Technology & Maritime
Transport
College of International Transport & Logistics
International Trade Course
Analysis for Balance of payments in Egypt
Submitted to: Dr. Abdallah Ramadan
Submitted by: Ahmad Bakr

2. Analysis for Balance of payments in Egypt during fiscal years
(2010 – 2013)
Egypt BOP has main components affect it and cause the deficit or the
surplus in the overall balance which is correlated with the change in
reserves and because it is a circulation. I will start my analysis by explain
briefly the main sources of international reserves.
The foreign currencies and gold are the main components of international
reserves in Egypt.
During the FY 2009-2010 Egypt has recorded its highest peak by USD 36
billion$ but due to recent political and economic crises after the 25th
of
January revolution the net IR lost around USD 8 billion$ in only 4 months
and persists during the 2011-2013.
But what are the main sources of foreign currencies that national reserves
depends on
- Exports
- Suez Canal
- Travel (tourism)
- Transfers ( worker’s remittance )
- Direct investment in Egypt
34.9 36
18.64
15.67 16.54
0
10
20
30
40
2009 2010 2011 2012 2013
Egypt Egypt Egypt Egypt Egypt
Egypt's International rserves
Foreign exchange reserves including gold, billion U.S. dollars

3. Performance of International reserves sources
Export of goods
The Egyptian exporting sector has recorded USD 26.9 billion$ during fiscal year 2010-2011 of
exporting goods due to export of petroleum and other exports this year compared with the next
year 2011/2012 due to the revolution was high but it went up again in the year 2012/2013.
Suez Canal
Suez Canal sector in FY 2011-2012 has recorded a revenue of USD 5.2 billion$ this year was the
highest compared with the previous year and the year after Suez Canal revenue depends on
how many ships pass by Suez canal.
Travel (Tourism)
The Egyptian tourism sector has recorded in FY 2010/2011 USD10 billion$ against 9.4 billion$ in
FY 2011/2012 and 9.7 billion$ in FY 201/2013 this decrease in the last two years happened due
to the un stable political situation in Egypt which decrease the number of tourists the
performance of tourism center depends on the number of tourists and the nights they stayed.
26992.5
25071.9
26988.1
24000.0
25000.0
26000.0
27000.0
28000.0
2010/2011 2011/2012 2012/13*(1)
Exports
5052.9
5207.8
5031.8
4900
5000
5100
5200
5300
2010/2011 2011/2012 2012/13*(1)
Suez Canal
10588.7
9419.0
9751.8
8000.0
9000.0
10000.0
11000.0
2010/2011 2011/2012 2012/13*(1)
Travel

4. Transfer (worker’s remittance)
It considered as one of the main sources of foreign currency in Egypt and it
came at the second place for the sources of IR. During fiscal year
2012/2013 Egypt has recorded USD19.2billion$ which was the highest value
compared to the previous two years as shown above.
Net foreign direct investment
Egypt is a place of attraction for foreign investors and multinational
companies according to its location. During FY 2007/2008 Egypt has
reached its highest peak in direct investment when recorded
USD13.2billion$ but due to the financial crises erupted in 2009 the Egyptian
direct investment was negatively affected and persistent decreasing during
the last years due to the unstable economic and political situation.
13136.8
18408.0 19264.9
0
5000
10000
15000
20000
25000
2010/2011 2011/2012 2012/13*(1)
Transfers
6111.4
11053.2
13236.5
8113.4
6758.2
2188.6
3982.2 3753.3 4119.3
0
2000
4000
6000
8000
10000
12000
14000
Direct Investment In Egypt (net) * *

5. From the above analysis it can be noticed that most of resources of
international reserves in Egypt has been witnessing a not bad performance
in FY 2010-2011 and it went worse due to the political situation.
Exports came at the first place for the main sources of international
reserves between the other sources.
Pressure on international reserves
Service Balance
Service Balance witnesses drawback from FY 2010/2011 which recorded USD 7.8billion$
against USD 5.5billion$ in FY 2011/2012 which decreased by USD2.3billion$ and as
shown the trend line goes down which it is an indicator to the drawback.
0.0
5000.0
10000.0
15000.0
20000.0
25000.0
30000.0
2010/2011 2011/2012 2012/13*(1)
Sources of international reserves
Exports Suez Canal
Travel Transfers
Direct Investment In Egypt (net) * *
7878.4
5584.7 5039.4
0.0
5000.0
10000.0
2010/2011 2011/2012 2012/13*(1)
Services (net)

6. Imports
The gap between import and export is so big and have been increasing
relatively during years this gap caused by importing of consumption goods
not industrial goods and most of Egypt imported products is food
regardless the wide range of green area and the river Nile in FY 2011/2012
Egypt has recorded 59.2 billion$ which was the largest compared to the
other increasing gap between exports volume and imports volume affecting
negatively the trade account, balance of goods and services, current
account and finally the BOP because they are all related.
2010/2011 2011/2012 2012/13*(1)
Exports 26992.5 25071.9 26988.1
Imports -54095.5 -59210.9 -57682.8
26992.5 25071.9 26988.1
-54095.5
-59210.9 -57682.8
-70000.0
-60000.0
-50000.0
-40000.0
-30000.0
-20000.0
-10000.0
0.0
10000.0
20000.0
30000.0
40000.0
Imports vs Export

7. What government should do?
 For the current Solution
- Foreign borrowings from main international institution
(International Monetary Fund)
- Government bonds in foreign markets with value needed to
Compensate the deficit
- Set an agreement with Egypt’s debtors to gradually transfer
its loans to grants
 For Long term solution
- Government should calm the situation to reactive the
tourism sector.
- Great effort should be considered to rebuild the
infrastructure to facilitate the process of investment to
rebuild the trust in the Egyptian market and bring foreign
investors.
- Government should increasing production and
manufacturing in all sectors to enlarge the volume of
Egyptian exports.

8. Exchange Rate
When we talk about the exchange rate we should consider the currency as
a good and its price depends on demand and supply theory. So when the
demand for $ is high the price of $ must increase but when the supply of $
is the high the price of $ will fall.
Determination of exchange rates
Numerous factors affect the exchange and all are related in circulation
1-Inflation
US has lower inflation than that in Egypt therefore Egyptian exports will
become less competitive and the demand for EGP from foreigners will
decrease in the other side demand for dollar will increase due to the lower
rate of inflation in the US and when the demand increase the price will
increase.
2-Trade account deficit
Egypt imports more than it exports according to that we have a high
demand in the foreign currency more than foreigner demands our currency
due to our lower volume of exports.
3-Public debt
Nations with large public deficit and debts are less attractive to foreigner
investors which they are one of the main sources of supply for dollar.
When government pay for its debts this is an outflow of dollar which lead
us to decrease in the quantity supply of dollar.
4- Political Stability and Economic performance
Foreign investors always seek out stable countries with strong economic
performance which is not Egypt
All these Factors decrease the value of Egyptian pound and this will lead
people to dollarization which it is a currency with a value they trust, and
this will increase the demand for the dollar and leads to an increase to the
price of dollar.

9. 5.79 5.73 5.64 5.44 5.54 5.63
5.94 6.06
6.87 7.07
0
1
2
3
4
5
6
7
8
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USD vs EGP Average Rate
USD vs EGP
Year Average Rate
2005 5.79
2006 5.73
2007 5.64
2008 5.44
2009 5.54
2010 5.63
2011 5.94
2012 6.06
2013 6.87
2014 7.07