Non-oil sectors drive Egypt’s surging FDI inflows: CBE
Egypt’s non-oil business sectors were responsible for the lion’s share of net foreign direct investment (FDI) inflows during the first quarter (1Q) of the current FY2022/2023 (July-September 2022), the Central Bank of Egypt (CBE) said in a new report.
The period saw Egypt’s net foreign direct investment (FDI) inflows double to approximately $3.6 billion, up from $1.7 billion in the same period of FY2021/2022.
The report states that the non-oil business sectors received $3.3 billion in FDI inflows, growing by $1.5 billion, due to the rise in proceeds from the sale of local entities to non-residents.
The FDI inflows increase is attributed to the increase in net greenfield investments and capital increases of existing companies.
The report also showed a decrease in the net inflows for real estate purchases by non-residents in the 1Q of FY2022/2023 to $165 million, down from $231.1 million in the same period of FY2021/2022.
For the oil business sector, the report highlighted a fall in the 1Q of FY2022/2023 to $320.5 million, down from $489.2 million in the 1Q of FY2022/2023.
The report explains that the decrease in outflows is due to the increase in total inflows representing new investments of foreign oil contractors to $1.4 billion, up from $1.2 billion.
The FDI outflows, which represent cost recovery for the exploration, development and operations previously incurred by foreign partners, increased by $24.2 million to about $1.7 billion, according to the report.
Additionally, the report notes that the investment portfolio in Egypt shifted from a net inflow of $3.6 billion to a net outflow of $2.2 billion in the 1Q of FY2022/2023, reflecting investor concerns over the war in Ukraine and the tightening monetary policies adopted by the US Federal Reserve.
The report also indicates that Egypt’s net international reserves (NIRs) dropped to $33.2 billion in the 1Q of FY2022/2023, covering 5.2 months of merchandise imports at the end of September 2022.
Egypt’s external debt posted $155 billion at the end of September 2022, down by approximately $728.5 million compared to the end of June 2022, as a result of “the rise in net disbursements of loans and facilities by $2 billion and the appreciation of the US dollar exchange rate vis-à-vis the other currencies of the external debt, which led to a decrease of $2.7 billion in book value.”
The report also notes that the total deposits made by Saudi Arabia, Kuwait and UAE jumped to $14.958 billion in the 1Q of FY2022/2023, up from $11.976 billion recorded by the end of 2021, with Kuwait extending the maturity of a deposit worth $2 billion for a year to due in September 2023 instead of September 2022.
