Moody’s updates economy outlook to stable, highlight’s gov’t efforts, Maait

Cairo – October 8, 2023: Responding to Moody’s latest report on Egypt's sovereign credit rating and economic outlook, Minister of Finance, Mohamed Maait, explained that Moody’s decision to revise the economy’s future outlook from negative to stable reflects the government’s efforts to push ahead with its structural reforms to further attract investments and strengthen the private sector.  

Moody’s latest report downgrades Egypt’s credit rating in local and foreign currencies from B3 to Caa1 with a stable outlook, which Maait stressed was based on external and internal challenges which have also negatively affected macroeconomic indicators globally. These include the negative impact of the COVID-19 pandemic, the inflationary wave, and the Russian/Ukrainian war.

However, Maait emphasized the government’s efforts to implement more structural reforms and measures to mitigate the impact of the challenges mentioned by Moody’s report.

Vice Minister of Finance for Fiscal Policies and Institutional Reform, Ahmed Kouchouk, spoke on his optimistic view that Moody’s could upgrade the rating once the state raises its capacity to attract more foreign currency inflows through its IPO and privatization programs.

These would boost Egypt’s foreign exchange reserves, reduce external borrowing, reduce the debt service bill, and improving investors’ confidence in the Egyptian economy, he added.

Emphasizing the Egyptian economy’s resilience, Maait pointed out that the economy has witnessed robust financial performance during FY2022/2023, enabling the Ministry of Finance to manage the variables and challenges within both global and domestic landscapes in a balanced manner.  

The finance minister noted the challenges as the increase in inflation rates and interest rates, and a decline in the value of the Egyptian pound against the US Dollar.

Egypt recently revealed that it achieved an initial surplus of 1.63 percent of GDP during FY2022/23 compared to 1.3 percent of GDP in FY2021/2022, and has reduced the total budget deficit to 6 percent of GDP compared to 6.1 percent in the FY2021/2022.

The Ministry of Finance recorded a surge in tax revenues by 27.5 percent, reflecting the ministry’s digitization efforts, improving tax administration, and combating tax evasion and avoidance, explained an official statement from the ministry.

Attributing the decision to Egypt’s diminishing foreign currency reserves, Moody’s expects the country’s sales of assets would rebuild the economy’s hard currency reserve.

The Central Bank of Egypt revealed last week that Egypt's net international reserves have increased to $34.97 billion at the end of September 2023, climbing $1 billion from the previous month. This places the reserves at the highest level since 2019.