S&P raises Egypt’s sovereign credit rating to B

CAIRO – 12 May 2018: International rating agency Standard and Poor’s (S&P) raised on Friday Egypt’s sovereign credit rating to (B) from (B-), while it lowered the country's sovereign rating outlook to stable from positive.

S&P affirmed Egypt’s progress to implement structural reforms to support investment and GDP growth as the main driver behind the revision.

Egypt’s credit rating rise is the first since 2011, which saw large-scale social upheaval rocking the country.

Besides, Egypt's annual urban consumer price inflation decreased to 13.1 percent in April from 13.3 percent in March, the official statistics agency CAPMAS said on Thursday.

Egypt embarked on a bold economic reform program in 2014 that includes cutting energy subsidies and introducing new taxes to cut the budget deficit.

It floated its local currency in November 2016, after which it clinched a $12 billion loan from the International Monetary Fund (IMF). Foreign reserves have been increasing since then. Reserves were only $19.041 billion at the end of October 2016.

S&P’s announcement came during the current visit of the IMF's delegation to Egypt to review progress on economic reforms. The review is necessary before the fund disperses the fourth tranche of the $12 billion loan deal.

In December 2017, Cairo received the third tranche of the loan, worth $2 billion. The fourth disbursement will bring the total Egypt has received so far to $8 billion.

Foreign currencies’ balance in Egypt’s international reserves increased to $40.5 billion in April, up from $39 billion in March, increasing by LE 23 billion in one month, according to data from the Central Bank of Egypt (CBE).

Egypt’s foreign reserves reached $44.03 billion in April 2018 for the first time in history, compared to $42.61 billion at the end of March, according to the CBE.

The reserves are expected to further grow over the coming two years to reach $50 billion, banking sources said Wednesday.

They said that the reserves will be buoyed by tourism revenues, Egypt’s Eurobonds issuance, foreign direct investments and the savings from natural gas imports.

Egypt imports goods with an average of $5 billion monthly, meaning that the current reserves will cover around eight months of imports.

The international reserves in Egypt consist of a basket of five main currencies, namely, U.S. Dollar, Pound Sterling, Euro, Japanese Yen and Chinese Yuan.