International financial institutions remain confident in Egypt’s ability to deal positively with the novel coronavirus (COVID-19) pandemic, Egypt’s Minister of Finance Mohamed Maait has confirmed.
This comes after Standard & Poor (S&P) decided to maintain Egypt’s credit rating in the local and foreign currencies at “B” level. The rating agency also preserved the Egyptian economy’s stable outlook for the third time in a row since the beginning of the coronavirus crisis.
This reflects the continued confidence of international institutions and credit rating agencies in the Egyptian economy’s resilience, and its ability to positively and flexibly deal with the repercussions of the pandemic.
This compares to countries with similar or higher credit ratings, at a time when economic conditions have deteriorated in most peer and emerging countries.
In a statement on Saturday, Maait said that, according to the estimates of S&P’s latest report, the Egyptian economy can overcome the negative repercussions of the pandemic. This is due to the improvement of major economic indicators, such as the stability of public finances, and the existence of a large and reassuring foreign exchange (FX) reserves.
This is in addition to the government’s continued financial, economic, and structural reforms that improve the business operating environment and ensure the sustainability of economic indicators conditions.
The minister added that S&P’s decision reflects the continued confidence that has arisen from the large economic and financial reforms implemented during the past few years. These have given sufficient flexibility for the Egyptian economy to finance its needs in local and foreign currencies, despite the recent deterioration in global economic and financial conditions.
This has contributed to ensuring that the Egyptian economy was one of the very few economies in the world that achieved growth and saw improved unemployment rates during 2020.
Maait reiterated that the fiscal adjustment efforts will continue, alongside continued efforts to reduce debt to GDP. He noted that, in its latest report, S&P’s expects a strong positive contribution to government and private investments, which will contribute to achieving sustainable growth rates of about 5.3% in the medium term during the period 2022-2024.
This is in addition to the positive impact generated through the continuous improvement of Egypt’s business climate.
Ahmed Kochouk, Deputy Minister for Financial Policies, said that S&P expects an improvement in the Egyptian economy’s growth prospects due to the government’s commitment to the path of economic, financial, and structural reforms.
It also expects the gradual improvement of most economic and financial indicators in the medium term, including the decline of the government debt rate as a percentage of the GDP. This includes the improvement and decline of the debt service bill due to the continued realisation of an initial surplus of 2% of the GDP in the coming years.
This is the result of the Ministry of Finance’s efforts to extend the life of the debt to 3.2 years during 2020 and about 3.6 years by June 2021, in light of the low rates of local interest.