Egypt’s BoP Deficit Narrows to $1.8 Billion on Record Gulf Remittances

Egypt’s overall balance of payments deficit narrowed by 2.9% year-on-year during the first nine months of fiscal year 2025/2026, reaching approximately $1.8 billion, compared with $1.9 billion in the same period a year earlier, according to data from the Central Bank of Egypt (CBE). The improvement, reported by CBE and published on July 13, 2026, was driven almost entirely by a record surge in remittances from Egyptians working abroad. Workers’ remittances rose 31.2% between July 2025 and May 2026 to around $43.1 billion, up from $32.8 billion a year earlier. In May 2026 alone, monthly inflows reached approximately $3.9 billion, up 13.5% from $3.4 billion in May 2025.

CBE Data Shows BoP Deficit Narrowed

The Sada Elbalad report of the CBE data shows the cumulative monthly remittance figures climbing the fiscal year. Remittances stood at $29.4 billion after the first eight months, $34.9 billion after the first nine months, $39.2 billion after the first ten months, and $43.1 billion after the first eleven months of FY 2025/26, the CBE said, according to Egypt’s monthly remittance data. Ahram Online, citing CBE, also reported that the overall deficit had widened during the first half of FY 2025/26 to $2.1 billion, before the second-half surge in May pulled the nine-month figure down. The trajectory makes clear that Egypt’s external accounts are turning the corner, but only because the eleven-month reading jumped by $3.9 billion in the final month alone.

The CBE’s report also disclosed a record $55.07 billion in net international reserves at the end of June 2026, up about 3.6% from $53.13 billion at the end of May, the strongest reserve position Egypt has carried on record. Earlier, reserves had reached $52.8 billion as of March 2026, before the Middle East war began on February 28, per S&P Global Ratings’ sovereign rating action on Egypt. The deficit did not close; it only narrowed. Egypt remains in deficit. The CBE frames this as consolidation, not transformation, and the improvement is the product of one specific engine running at full speed.

The Gulf Engine Behind the Numbers

Behind every $1,000 in that $43.1 billion sits a worker, and almost all of those workers are in the Gulf. Egypt’s sovereign credit rating action from S&P Global puts the share of Egyptian remittances originating in Gulf Cooperation Council states at about 70%. The Gulf is not a marginal source; it is the engine room.

Saudi Arabia, home to around 1.5 million Egyptians, has remained the largest single source of remittances, sending back around $8 billion in 2023-2024, according to previous CBE data reported by the Gulf-based Egyptians pushing remittances industry outlet. Together with Kuwait and the UAE, the three Gulf countries sent around $12 billion that fiscal year, almost half of the $26 billion in total transfers. Karim Omda, a Cairo-based economics professor, said on Sada Al-Balad TV this week that the disappearance of Egypt’s parallel currency market had pushed most overseas Egyptians to remit through official channels, with improved investment laws, higher wages for many workers, and a larger overseas workforce adding to the flow.

Another reason is the disappearance of the black market in Egypt following the government’s decision to unify currency rates. This has tempted most Egyptians abroad to remit funds through official channels.

Karim Omda, a Cairo-based economics professor, speaking on Sada Al-Balad TV, July 2026. Most of those transfers are not extra income; they are higher costs being passed home. Annual core inflation climbed to 14.3% in June 2026, up from 13.8% in May, according to CBE data cited by AGBI, and annual urban inflation slowed to 14.3% in June from 14.6% in May. The IMF projects urban inflation could reach 15.8% by the end of the fiscal year.

Egypt is the third-largest Arab economy, but it has been a structural net energy importer since 2023. Fuel and gas imports account for about 22% and 8% of total goods imports, respectively, per S&P. About 60% of total gas imports come from Israel’s Leviathan field, and Egypt is one of the world’s largest wheat importers, at around 5% of total goods imports. The remittance surge is, in part, the diaspora paying the import bill through the formal banking system, with the country’s balance of payments the conduit.

The $1.6 Billion IMF Tranche

The IMF reached a staff-level agreement with Egypt on June 29, 2026, that would release approximately $1.6 billion once the Executive Board signs off, according to Sada Elbalad’s reporting of IMF data. The package includes around $1.5 billion under the Extended Fund Facility and approximately $136 million through the Resilience and Sustainability Facility. Ahram reported that Egypt was awaiting the Executive Board’s approval as of publication. Bringing cumulative disbursements under both programs to around $7.2 billion after the board’s sign-off, the tranche is the seventh review of the EFF and the second under the RSF, in the broader context laid out in the IMF deal context on iaqaba.com. Egypt is also covered by a €7.4 billion EU package, stated in S&P’s analysis as $8.1 billion, that the European Union announced in March 2024 over four years.

The IMF more than doubled the size of Egypt’s 46-month program in March 2024 to $8 billion and extended it to December 2026, per S&P. The same program has already disbursed $2 billion under the EFF and an additional $273 million under the RSF in February 2026, after the combined fifth and sixth reviews. The Qatari deposit of $3.5 billion at the CBE in November 2025 was a key support for that approval, helping the government clear the program benchmarks.

The Inflation Gulf Workers Are Funding

The IMF called the impact of regional geopolitical tensions on Egypt’s economy “relatively limited,” but only because the price of absorbing them has been paid by households. Urban consumer price inflation stood at 14.6% in May 2026, the CBE’s May 2026 inflation release dated June 10, 2026 confirmed. The fund projects inflation could reach 15.8% by the end of the fiscal year, the Sada Elbalad report of the IMF said.

The impact of regional geopolitical tensions on Egypt’s economy has remained “relatively limited” due to swift government measures, including adjustments to fuel and electricity prices, energy conservation measures in public institutions, and the reprioritization of government spending.

The IMF, as reported by Sada Elbalad on July 13, 2026, summarising the fund’s assessment of Egypt’s economy. Egypt is now expected to exceed its primary surplus and tax-revenue targets through the end of March 2026, the IMF said, citing Egyptian fiscal data. The IMF expects the primary surplus to rise to 5% of GDP in fiscal year 2026/2027, from an estimated 4.8% in fiscal year 2025/2026, and these are the numbers behind the IMF and CBE keeping monetary policy tight even as the external accounts heal.

On April 2, 2026, the CBE held its benchmark deposit rate at 19% and its lending rate at 20%, pausing a cumulative 825-basis-point easing cycle that began in April 2025, according to S&P. The pause signalled the central bank was unwilling to loosen while the conflict pushed the pound lower. The Egyptian pound has lost about 13% of its value against the US dollar since February 28, the day the Middle East war started, per S&P. The authorities have so far refused to intervene to prop up the currency, in line with their IMF-backed commitment to a market-determined exchange rate, a stance the IMF has identified as a key mechanism for absorbing external shocks.

How a Dead Black Market Built the Reserves

The reserves that allowed the deficit to narrow are themselves a story of capital flows, not just CBE accumulation. Egypt’s net international reserves stood at $55.07 billion at the end of June 2026, a record, after a $3.5 billion deposit from Qatar at the CBE in November 2025 helped anchor the position. Earlier, reserves had been $52.8 billion as of March 2026, S&P noted, before the Middle East war began on February 28, a setup examined in Egypt’s pound stability under flexible rates.

The war changed the picture. Foreign portfolio outflows rose to about $10 billion within one month of the conflict’s start, S&P reported. Nonresident holdings of Egyptian local-currency government securities fell to $27.1 billion by March 25, from a peak of $38.1 billion in January.

Most of that outflow was absorbed by the banking system before reaching the reserves line, S&P said. The banking sector’s net foreign asset position sat at a record $30 billion in January 2026, a buffer built from earlier foreign inflows. That buffer means the headline reserves number understates Egypt’s true foreign currency firepower, with reserves as the floor and bank NFA as the larger building above it.

The black market for the Egyptian pound has effectively disappeared since the government unified currency rates, Karim Omda said on Sada Al-Balad TV. That disappearance is the largest single reason remittances now flow through formal channels, lifting the official $43.1 billion figure above any prior reading.

Why This Time Looks Different From 2022

Egypt has run this film before, and the cuts are familiar. In February 2022, when the Russia-Ukraine war started, Egypt’s international reserves stood at $41.0 billion with no IMF program and limited currency flexibility, S&P noted. Foreign portfolio outflows of $20 billion followed within months. Today’s setup is materially different in three ways: reserves, exchange rate, and external support, with the geopolitical risk map laid out in AfDB’s four revenue channels at risk.

Reserves are higher, at $55.07 billion as of June 2026 versus $41.0 billion in February 2022. The exchange rate is now market-determined, after a 60% devaluation in March 2024. And Egypt has an $8 billion IMF program extended through December 2026, with the seventh review’s $1.6 billion tranche still to come. S&P forecasts growth of 4.7% in FY 2025/2026 and 4.3% in FY 2026/2027. The IMF expects the primary surplus to reach 5% of GDP in fiscal year 2026/2027, and S&P affirmed Egypt’s B/B sovereign credit ratings with a stable outlook on April 10, 2026.

Frequently Asked Questions

What did Egypt’s central bank report about the balance of payments?

A balance of payments is the record of all cross-border money flows in a country: trade in goods and services, investment income, and transfers such as remittances. Egypt’s Central Bank said on July 13, 2026, that the overall deficit narrowed by 2.9% year-on-year in the first nine months of FY 2025/26 to around $1.8 billion, down from $1.9 billion a year earlier.

Why are Egyptian worker remittances hitting records?

Remittances climb when more workers abroad send money through official channels. The end of Egypt’s parallel currency market after the March 2024 devaluation removed the discount that once drew transfers into informal hands, the AGBI industry outlet reported, while the rising cost of living at home gave overseas families more reason to send.

What does the $1.6 billion IMF agreement cover?

The staff-level agreement reached on June 29, 2026, would release about $1.5 billion under the Extended Fund Facility, the IMF’s main budget-support instrument, and around $136 million under the Resilience and Sustainability Facility, which finances climate and pandemic preparedness. Both disbursements are conditional on Executive Board approval, Ahram reported.

How high is Egyptian inflation right now?

Annual urban inflation was 14.6% in May 2026, the CBE said on June 10, 2026, and the IMF projects it could reach 15.8% by the end of the fiscal year. Annual core inflation, which strips out volatile items, climbed to 14.3% in June 2026, up from 13.8% in May, according to CBE data cited by AGBI.

How vulnerable is Egypt to the Middle East conflict?

S&P Global Ratings calls Egypt’s external buffers “materially stronger” than in past crises, citing reserves of $55.07 billion at end of June 2026 and a record bank-sector net foreign asset position of about $30 billion in January 2026. The vulnerability is concentration, with about 70% of remittances originating in Gulf Cooperation Council states and about 60% of Egypt’s gas imports coming from Israel’s Leviathan field, both exposed to regional escalation.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or economic advice. Figures are accurate as of publication; readers should consult qualified professionals for currency, investment, or economic decisions.