"Fitch" confirms Egypt's classification at "B +" with a stable outlook

"Fitch" confirms Egypt's classification at "B +" with a stable outlook

International credit rating agency Fitch confirmed the Egyptian economy's rating at "B +" with a stable outlook.

The agency said, in a statement, today, Monday, that fixing the credit rating for Egypt comes with support from the process of economic and financial reform made by Egypt, improvement in the environment of macro stability and external financing, political commitment to strengthen the reform program, and the availability of financial and external financing in the face of the epidemic "Covid-19" ”

"Despite the impact of the Corona pandemic's effects on GDP growth and financial performance, we currently view the shock as a temporary disruption to what had previously been strong positive trends," Fitch added.

Fitch pointed out that the economic reforms in recent years have provided Egypt with a degree of flexibility to face the shock and repercussions of the Corona pandemic.

Fitch expects real GDP growth to be 2.5% in the fiscal year ending in June 2021 (fiscal year 2021), which is well below the average growth of 5.5% in fiscal year 2018 and fiscal year 2019.

It believes that growth will rebound to 5.5% in FY 2022, and maintain its average rate in the medium term by just over 5% on the assumption that tourism will gradually return, increase growth in the energy and manufacturing sectors, and gradual improvements in the business environment.

The agency expected an improvement in the budget deficit, government debt, and the current account balance in 2021-2022.

In general, the policy-making process remained conservative, and only modest financial and monetary easing has occurred since March, when the central bank cut interest rates by 300 points to 9.25% early in the crisis in March, but real interest rates remain consistently positive Due to the trend to reduce inflation.

Fitch expects average inflation to reach 6% in 2020 and 7.5% in 2021. In response to this epidemic, the central bank has taken a number of measures, including directing banks to extend customer loan maturities until mid-September, and assigning a group Of fees.

The agency noted that Egypt will remain committed to its reform program, adding that since March the government announced financial incentives totaling 180 billion Egyptian pounds (2.8% of GDP), and the fiscal year 21 budget was aimed at achieving 2.0% of the surplus of the GDP budget sector While the government is now seeking to achieve a surplus of 0.5% of the gross domestic product, as it expected to achieve an initial surplus again in the fiscal year 2022, and that the total deficit shrink to about 8%.

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