CAIRO - 2 November 2024: Fitch Ratings has upgraded Egypt’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘B-’ to ‘B,’ with a Stable Outlook, reflecting improved external finances, increased exchange rate flexibility, and policy adjustments.
The agency said that the upgrade is underpinned by recent inflows from foreign investments, notably the Ras El-Hekma deal, which boosted Egypt's FX reserves. Reforms such as increased exchange rate flexibility and stricter monetary policies have strengthened Egypt's external finances, raising confidence in the durability of these adjustments.
It added that Egypt’s international reserves rose by $11.4 billion in the first nine months of 2024, reaching $44.5 billion, supported by the Ras El-Hekma deal and increased non-resident investment in local debt. These steps help reduce reliance on external debt.
“International financing, such as the IMF's $8 billion Extended Fund Facility and €7.4 billion EU support, has aided in financing Egypt’s current account deficit. Foreign Direct Investment (FDI) is projected to average $16.5 billion annually through FY25 and FY26, further strengthening Egypt’s economic resilience,” it added.
According to Fitch, the IMF's monitoring has helped ensure a more flexible exchange rate, with increased interbank FX volumes and no significant divergence in parallel market rates. This flexibility is seen as sustainable under the current policy framework.
Moreover, it said that inflation has decreased from a peak of 35.7 percent in February to 26.4 percent in September and is expected to fall further. High interest rates are anticipated to decrease, which will lower the government’s debt servicing burden, a crucial factor for fiscal health.
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