Positive Outlook is a token on continuous reforms, increasing growth rates, promising investment appetite and fruitful access with international financial institutions
Finance Minister, Mr. Al-Garhy, announces:
· Fitch rating is a positive step forward and an acknowledgment from the international financial community on the improvement of reform-backed economic indicators.
· We are committed to proceeding in financial and structural reforms to bolster growth and provide new vacancies.
Fitch Ratings has revised the outlook on Egypt's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at 'B', according to a report released on 16 January.
"The Central Bank of Egypt's (CBE) exchange rate reform has proved a turning point for the economy and Egypt's external finances; and macroeconomic stability has started to improve following an inflationary spike,” the Fitch report added.
Commenting on Fitch Ratings' revision of Egypt's outlook, Finance Minister, Mr. Amr Al-Garhy confirmed that the decision came as a certificate of trust to the Egyptian economic reform program, and shall lure more foreign investments and lessen financing costs for both the public and private sectors alike.
Since Egypt kick-started its economic reform program in 2016, Fitch positive revision comes second in row after Standard and Poor's took the same measure last November 2017.
Economy-supporting leadership, medium-term financial sustainability, upgraded infrastructure, more oriented subsidy programs, tight financial control, energy rationalized subsidy and application of VAT and civil service law, were all triggering factors behind the agency's positive revision, emphasized the minister.
On his part, Vice Minister for Fiscal Policies, Mr. Ahmed Kouchouk, stated that Fitch hailed the improvement achieved in main indicators of the external sector. Such progress was achieved thanks to the floatation of the exchange rate in November 2016, the following surge in foreign reserves to almost USD 37 billion in December 2017, and the accompanying 66% fall in trade balance deficit over Q1 of FY 2017/18.
Fitch agency also forecasts a GDP growth of 4.8 percent in fiscal year 2017/18, on the back of exchange rate adjustment and the increase in gas production. It also expects the budget deficit to narrow further in fiscal year 2017/18 to 9.7 percent, and inflation to reach an average of 13% to 14% by the end of 2018.
On the other hand, the report stated that “The key risk to this outlook is that reform momentum weakens". Other risks also include high debt rates, decreasing foreign reserves and potential political unrest.
Worth mentioning that the Egyptian economy falls now within the 14 countries which received positive outlook in Fitch rating revisions. This, consequently, implies that Fitch forecasts that their credit rating be further upgraded differently in the coming period. Main countries include Vietnam, Spain, Russia, Greece, Argentine and Cyprus.