Egypt - Balance of Payments and Main Sources of Foreign Exchange

Balance of payments and main sources of foreign exchange

Balance of payments transactions are usually tabulated under two broad categories, current account and capital account. Current account includes visible (merchandise) trade as well as invisible items, such as tourism, shipping, and profits and other moneys earned overseas.

In Egypt the credit side of the current account balance was heavily influenced by four items: oil, the Suez Canal, tourism, and workers' remittances. Their share in total resources (GDP plus net imports) climbed to about 45 percent in the early 1980s, from 6 percent in 1974. It declined afterward but continued to be the backbone of the economy. These four items also contributed considerably more to Egypt's foreign exchange income than they did to the country's total resources. A common characteristic of these items was that they were "exogenous" resources, i.e., their productivity had little relationship to Egyptian labor, and their income was highly dependent on market and political forces beyond the control of the Egyptian government.

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