Fitch revises Egypt’s outlook to positive
Updated 5/4/2024 10:06:00 AM
Arab Finance: Fitch Ratings has revised Egypt’s outlook to positive from stable, affirming the country’s long-term foreign-currency issuer default rating (IDR) at ‘B-’, the leading credit rating provider revealed in a press release on May 3rd.
Fitch attributed its decision to reduced external risks for Egypt and stronger foreign direct investments (FDIs).
The report showed that the rating agency is more optimistic that Egypt’s exchange rate flexibility will be more durable than in the past, adding that the initial measures to contain off-budget spending should contribute to mitigating risks to public debt sustainability.
“Our somewhat greater confidence that exchange rate flexibility will be more durable partly reflects its close monitoring under Egypt's IMF EFF, which runs to late 2026,” the report read.
Fitch expects Egypt’s gross foreign exchange reserves to increase by $16.2 billion in the fiscal year (FY) 2024 to $49.7 billion.
This is partly ascribed to lower oil and services exports and a temporary increase in imports from the recent clearance of an estimated $8 billion foreign exchange backlog, the agency stated.
Moreover, foreign exchange reserves are forecasted to move up further to $53.3 billion by FY 2025, while the net external debt is projected to fall to 23.2% of gross domestic product (GDP) in FY 2023/2025.
Also, Fitch expects inflation to fall to 12.3% in June 2025.
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