Egypt’s credit rating to improve as foreign reserves surge

CAIRO – 8 August 2017: Seven-year high foreign reserves will help in raising Egypt’s credit rating from international agencies, governor of the Central Bank of Egypt (CBE) Tarek Amer said Monday.

During a meeting with President Abdel Fatah al-Sisi to review economic and exchange rate developments, Amer said the $36.04 billion value of foreign reserves recorded at the end of June will support confidence of foreign investors in Egyptian economy.

Amer added that international turnout on purchasing treasury bills and bonds will also increase as a result, according to a statement from the presidency.

International rating agency S&P Global will consider changing Egypt’s credit rating if economic growth rate exceeded expectations, S&P Egypt analyst Nourredine Lafhel told Egypt Today in an interview.

Had this happened, S&P’s outlook for the Egyptian economy will be upgraded from stable to positive, Lafhel added.

S&P predicted Egypt’s real GDP to keep growing at a rate of 4 percent over 2017-2020 period.

After the government hiked fuel prices at the end of June, international agency Fitch Ratings said the decision represented a continued commitment to fiscal consolidation and economic reform.

“Narrowing the fiscal deficit supports Egypt's sovereign credit profile, but significantly reducing the public debt ratio is a multi-year task,” the rating agency said.

Egypt's foreign reserves jumped by $4.73 billion in June to $36.04 billion, the central bank said on August 1, recording the highest level since the 2011 political uprising.

Foreign reserves in the CBE have been rising since the Egyptian government clinched a $12 billion three-year loan from the International Monetary Fund in November, restoring confidence in the Egyptian market.