Finance min.: Fitch's decision reflects int'l institutions’ confidence in national economy

CAIRO - 28 July 2020: Finance Minister Mohamed Maait has said that Fitch Ratings' decision to keep Egypt's long-term foreign and local currency issuer ratings at B+ with a stable outlook reflects again the confidence of international institutions, especially credit rating agencies, in the country's economy to deal with the novel coronavirus (COVID-19) crisis, thanks to bold economic reforms implemented over the past few years.  

Egypt was the only country in the Middle East and Africa, whose credit rating was maintained with a stable outlook by S&P Global Ratings, Moody's and Fitch, Maait said in a statement issued by the Finance Ministry on Tuesday.

He went on to say that this decision is a clear evidence of the confidence of Fitch experts and analysts in the effective and balanced economic and financial policies adopted by the Egyptian government to handle the current health crisis, the statement added.

Fitch's move also comes in recognition of the government's efforts to introduce a package of structural reforms to increase growth rates and encourage the private sector's participation in the national economy, along with strengthening the system of governance, the statement noted.

The coronavirus shock is negatively affecting Egypt's external finances, GDP growth and fiscal performance, Fitch said in its report released on Monday. "We currently view the shock as a material but possibly temporary disruption to what were previously strong positive trends, it added. 

The reforms in recent years have provided Egypt with a degree of flexibility to weather this shock at its current rating, it also said. Nonetheless, the pandemic still presents risks to Egypt's credit metrics depending on the duration of the global health crisis, it added.

Fitch said "We forecast real GDP growth to be 2.5% in the fiscal year ending June 2021 (FY21), well below average growth of 5.5% in FY18 and FY19. We expect growth to recover to 5.5% in FY22 and to be maintained at just over 5% in the medium term, assuming tourism gradually returns, further growth in the energy and manufacturing sectors and gradual improvements in the business environment."

"Similarly, following deterioration this year, we forecast improvements in the budget deficit, government debt and the current account balance in 2021-2022."