Egypt’s current account deficit more than doubled in the first quarter of 2026, official data released this week show, as the North African economy grapples with persistently high import costs and a sluggish recovery in tourism. The central bank reported a deficit of $5.6bn for the three months to the end of March, up from $2.4bn in the same quarter of 2025.
The deterioration was largely attributed to a surge in imports of capital goods and foodstuffs, together with a decline in tourism receipts. Although visitor numbers have recovered from the pandemic lows, geopolitical tensions in the region have dampened demand from key European markets, including the UK. The Suez Canal, a vital source of hard currency, has also seen revenues fall as shipping volumes remain below pre-crisis levels.
For Egypt, the widening deficit compounds an already severe foreign currency shortage that has forced the government to devalue the pound repeatedly over the past two years. The currency has lost more than 50% of its value against the US dollar since early 2024, fuelling inflation that now exceeds 30%. The central bank has raised interest rates aggressively to try to stem capital outflows, but foreign portfolio investment remains volatile.
Analysts at Capital Economics noted that the deficit data underscore the structural challenges facing Egypt’s economy. “The external position remains fragile, and the country is heavily reliant on Gulf financial support and IMF programme disbursements to plug the gap,” they said in a note. “Without a sustained improvement in export earnings and tourism receipts, pressure on the pound and reserves will persist.”
The news comes as the International Monetary Fund is due to complete its fourth review of Egypt’s $8bn extended fund facility later this year. A further devaluation or additional austerity measures could be required to meet programme targets, raising the risk of social unrest. For UK investors who hold Egyptian government bonds — a popular high-yield emerging-market play — the widening deficit signals that default risk remains elevated, despite recent restructuring efforts.
On the London Stock Exchange, the FTSE 100 closed flat on the day, but emerging-market focused investment trusts saw modest outflows. The iShares J.P. Morgan USD Emerging Markets Bond ETF dipped 0.3% in afternoon trading. Analysts cautioned that any further deterioration in Egypt’s external accounts could trigger a broader reassessment of risk across North African and Middle Eastern sovereign debt markets.