Standard Chartered expects Egypt’s asset sales to progress

Updated 5/25/2023 1:22:00 PM

Arab Finance: Egypt is likely to achieve progress on asset sales and other International Monetary Fund’s (IMF) requirements within the coming months and IMF’s executive board approval of the first review in the third quarter of the year, Standard Chartered said in an emailed research note on May 25^th.

However, Egypt’s large repayment to the IMF as well as external bond maturities are posing challenges for the country, worrying both investors and rating agencies, according to the note.

The North African state is in need of settling about $25 billion annually for the next four years, including repayments of $10.3 billion to the IMF and $6.2 billion of Eurobonds.

The British bank expected that any further devaluation in the Egyptian pound would add to the debt burden, which the IMF estimates it hit 91.6% of gross domestic product (GDP) in June 2022.

The parallel market indicates that EGP is moving towards around 38 against USD, which would push the debt-to-GDP ratio above 100% by the end of next June, Standard Chartered added.

The bank also forecasts imports to continue shrinking due to the current foreign exchange liquidity shortfalls and slackening activities of large infrastructure projects, which is likely to be partly counterbalanced by reduced petroleum surpluses as European gas prices cool.

Moreover, the bank predicts the interest costs-to-revenue ratio to exceed 50% in fiscal years (FY) 2022/2023 and 2023/2024, compared to 44% in FY 2021/2022.