Egypt's political, economic situation improved under Sisi: Euromoney

CAIRO – 20 January 2018: Egypt is definitely going in the right direction and its recovery is noticeable, Christian Richter, a contributor to Euromoney's risk survey and a professor in economics at the German University in Cairo, said Friday.

"There is still work to be done, but under president Abdel Fattah El Sisi, the political and economic situation has improved massively," Richter added in a report titled "Why Egypt offers an alternative to Morocco and Tunisia", published on Euromoney official site.

This week, Fitch altered its assessment of Egypt by putting its B rating on a positive outlook, the report said.

In Euromoney's country risk survey, the sovereign borrower ranks 119th out of 186 countries, a tier-five sovereign that is among the world's worst default risks, but crucially one that is improving, it added.

The discernible amelioration to the economic outlook has occurred in response to three main factors: floating the Egyptian pound, benefiting from improving global trade and gaining a three-year financing arrangement from the IMF, the report said.

Improving security for tourists and investors is crucial, too, considering the combined effects of the revolution, it added.

The devalued pound since it was floated has made Egypt cheaper and more attractive in that respect, while simultaneously giving a lift to non-hydrocarbon exports. Moreover, the government passed a new investment law in May 2017 offering incentives to attract foreign capital, and a new bankruptcy protection law is currently working its way through parliament, Euromoney said.

Encouragingly, the government has upgraded its GDP growth estimate for the fiscal year 2017-18 from 4.8% to between 5.3% and 5.5%, and is projecting 6% growth for 2018-19, and targets a primary surplus in 2018/19 for the first time in more than 15 years. IMF financing with Suez Canal and oil and gas revenues furthermore ensure the foreign currency reserves cover around five months of imports, it added.

In comparison, Morocco and Tunisia were marked down last year; Morocco slipped two places in the rankings and Tunisia by three, the report said.