Fitch’s downgrade comes amid complex global challenges, external pressures on Egypt’s economy: Minister

CAIRO – 6 May 2023: Egypt’s Minister of Finance Mohamed Maait said Fitch’s decision to downgrade Egypt to B from B+ comes amid the complex global challenges of the Ukraine war, global inflation wave, and rise in interests.

He added in a statement on Saturday that the decision reflects Fitch’s estimates in light of the continuation of the hard foreign external pressures on the economy as a result of these global challenges.

Maait also shed light on the wave of outflow of the capitals from the emerging markets, including Egypt, toward the developed countries and the state of uncertainty among investors.

Fitch’s decision also came in light of the institution's projections with regard to estimates of the foreign finance needs of the Egyptian economy and the conditions of the international capital market.

Fitch downgraded Egypt's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to B in a Friday report combined with a negative outlook.

Maait, however, stressed that the Egyptian economy lured large foreign investments in the first half of the fiscal year and financial resources from several international institutions despite all international challenges, he said.

He referred to the government's offerings within the framework of the State Ownership Policy Document, saying that they are meant to open vistas for foreign investments which are targeted to reach $2 billion before the end of the fiscal year.

The minister added that Egypt is proceeding with implementing an integrated package of reforms to promote the economy in the face of external shocks.

He noted that Egypt seeks to realize an initial surplus standing at 1.5 percent of GDP during the current fiscal year and 2.5 percent in the coming year in order to down the debt-to-GDP ratio to less than 80 percent by the 2026-2027 fiscal year.

He said if the dollar price on the pound was not changed, the debt-to-GDP ratio would have been downed to less than 80 percent this year.

He added that the social protection funds allocated in the coming fiscal year's budget stand at LE 529.7 billion.

MENA contributed to the reporting.