Soft Launch
“If Bond Market Could Decide, Egypt Would Be Set for Upgrade” 
 

·         Egypt borrowing costs bottomed out thanks to increasing demand on Egypt's dollar bonds

·         Bloomberg's report proves the success of the economic reform program…and Egypt will continue moving ahead, confirms Minister of Finance Mr. Amr Al-Garhy.

 

Bloomberg's report on Egypt highlighted that international markets responded positively to the Egyptian economic and financial reforms. This was manifested in the continuous increase of the value of Egypt's dollar bonds issued last January and the subsequent decrease in Egypt's international borrowing costs to reach its lowest levels since 2015.  According to Moody's Analytics, the domestic debt got a B2 rating, which is a higher level than the official grade Egypt is expected to have in the next rating upgrades.

 

Positive indicators of Egypt's bond turnover reflect investors' regain of trust in the Egyptian economy and  the low risk levels implied in trading in the Egyptian securities, a step which further supports economic reforms implemented by the government, underlined the report.

 

As pointed out in the report, capital markets are always more steps ahead of international credit rating institutions. Therefore, a better grade could have been given to Egypt if  the decision were in the hands of international markets. However, Egypt's  grade is expected to be reviewed soon to reflect its actual promising bond performance. Despite the several upgrades granted to Egypt over the last two years, yet they are still below  the real  performance indicators of capital markets, noted the report.

 

The report noted that IMF's support to President Abdel Fatah El-Sisi's economic reform policies eased all potential fears of foreign investors and financial institutions and regained trust in the Egyptian economy. In addition, such step proved Egypt's capability in improving economic performance indicators, decreasing budget deficit, curbing domestic debt, achieving expected growth rates in present and the next FY, and eventually warranting Egypt a leading position among the emerging financial markets.

 

Commenting on the report, Mr. Amr Al-Garhy  emphasized that international markets held indeed an optimistic view towards the Egyptian economy and the promising outlook it offers thanks to the radical reforms carried out by the government to put the economy on its right track and to strike financial balances.

 

He added that the financial reform policy would continue through the next FY and would be manifested in the draft law of the State’s General Budget 2017/2018, which aims to decrease general budget deficit and public debt to less than 9.5% and  93%, respectively, and to achieve a primary surplus before  deduction of public debt interest rates worth 11 billion EGP.