Egyptian Finance Minister Mohamed Maait commented on Fitch’s rating of the Egyptian economy as “negative” ahead after his outlook was “stable”.
Egypt’s finance minister said Fitch’s decision was broadly positive to lock Egypt’s credit rating and change its outlook from “stable” to “negative”, but the change in outlook to “negative” indicates that this analysis and valuation does not appear to took into account the recent measures, policies and comprehensive reforms undertaken by the Egyptian government, which contributed to the decision of some other international rating organizations to fix Egypt’s credit rating, as well as future projections in recent weeks, in addition to reaching an expert-level agreement between the Egyptian authorities and the International Monetary Program Support Fund Comprehensive Egyptian National Economic Reform is a four-year term, allowing the International Monetary Fund to support and support the program through an extended $3 billion credit line.
The minister added in a press statement to the ministry today, Thursday, that an agreement with the International Monetary Fund is expected to be presented to the Fund’s Board of Directors in December, allowing the Egyptian authorities to receive an additional concessional external financing package of about $5 billion through a number of institutions. It also provides access to $1 billion in additional funding through the newly launched International Monetary Fund Sustainability and Sustainability Facility.
He noted that these events confirm that the Egyptian program of economic and financial reform with all its components enjoys strong support from all international organizations, which helps to provide Egypt with the appropriate and necessary soft financing to meet its needs, without the need to borrow funds in international bond markets. in the short term.
The Minister indicated that the government has responded positively to the concerns contained in the Fitch report by putting in place adequate, integrated and diversified packages and measures to ensure the desired results are achieved.
He explained that Egypt is working in many areas, structures and directions to provide additional and sufficient foreign exchange resources to finance the needs of the state and the development plan, the most important of which are: Strengthening partnership programs with the private sector to attract more foreign direct investment . , which amounted to about $9 billion last year, with an annual growth rate of 70% Continue efforts to stimulate the export sector to increase exports of goods and services to ensure that oil and non-oil revenues continue to achieve significant annual growth rates, which together reached the highest highest merchandise export revenues in Egypt’s history last year, in addition to ongoing support plans to increase service export revenues, the most important of which are: tourism revenues and the Suez Canal.
Fitch downgraded the outlook for Egypt’s economy to negative from stable, while maintaining the country’s credit rating at (B+).
The international rating agency Fitch explained the revision of expectations to “negative” by the worsening situation with Egypt’s external liquidity, as well as reduced access to international bond markets, which makes the country vulnerable to adverse global conditions, at a time when the current account deficit is growing in the budget. operations, and debt maturities are approaching.
The decline in foreign exchange reserves at the Central Bank of Egypt was a major factor in Fitch’s outlook adjustment, as by October 2022 those reserves fell to less than $32bn from $35bn in March and $40bn in February. Thus, the reserve coverage of just over three months of current external payments is weaker than the average that guarantees coverage of imports for 4 months.