Remittances, exports and ODA: Their impact on economic growth in Egypt

Abstract

Remittances are critical as a percentage of gross domestic product (GDP). The share of Egyptian migrants’ remittance inflows in the country’s GDP
continues to be stable. Thus, remittances accounted for a much larger share of international capital flows to the country than other sources, such as
official development assistance (ODA) and foreign direct investment (FDI). Remittances to Egypt surged by16.2% of GDP between 2016 and 2017.
Because Egyptian reforms encouraged FDI, remittances accounted for a lower proportion of GDP for the first time in the fiscal year 2017. However,
a $3 billion increase in remittances between 2017 and 2018 was primarily responsible for a significant portion of the reduction of the government’s
deficit in 2018. Remittance inflows enabled the Egyptian government to borrow from the private sector, and such a drastic change led to a more
sustainable fiscal policy.