Egypt: Review of Moody's Credit Rating Visit to Egypt

Moody's Credit Rating Agency lately sent a mission to Egypt over 7 to 9 August 2017 in light of its annual creditability rating review of the Egyptian economy.

In its capacity as a representative of the Egyptian economy, the Ministry of Finance took upon the task of arranging bilateral meetings between Moody's representatives on one part, and the Finance Minister, Vice Minister of Finance for Fiscal Policies, representatives of public & private banks and of international institutions in Egypt such as IMF, on the other part.

Moody's periodical visit aims to review latest developments of Egyptian economy and, in particular, steps taken forward on the economic reform program adopted by the government and unprecedentedly supported by the sovereign leadership. Such program aims at achieving both fiscal and monetary reform and at ameliorating business environment.

In his meetings with Moody's, Finance Minister, Mr. Amr Al-Garhy, informed its representatives with the primary economic axes and main fiscal targets of the reform program.

Stressing President Al-Sisi's support and persistence to accomplish all the program's objectives, Mr. Al-Garhy demonstrated main targets thereof as follows: increasing growth rates, cutting unemployment rates, achieving a medium-term financial sustainability by reducing debts and curbing deficit rates, expanding underprivileged subsidy programs, increasing allocations of human resources development, as well as improving the infrastructure and citizen-oriented services.

Mr. Al-Garhy also demonstrated to Moody’s representatives the positive economic indicators achieved in the mean time.

First of all, the State's general budget recorded an improvement through FY 2016/17, primary deficit against GDP decreased from 3.5% to 1.8%, as compared to the prior year, and economic growth rates upped to 4.9% over the 4th Q. of FY 2016/17 thanks to the flourishing of export and investments activities.

Moreover, international monetary reserves boosted to 36 billion EGP by end of July 2017; hence, supplying demand on imported commodities for 7.5 months.

Positive indicators were also recorded on the trade balance in comparison with prior years, whereas foreign investments and securities purchases recently surged to reach $ 15 billion as compared to less than $ 1 billion last November 2016.

On his part, Vice Minister of Finance for Fiscal Policies, Mr. Ahmed Kouchouk, noted that the Ministry of Finance was keen to arrange such bilateral meetings between Moody's representatives, those of public & private banks and of business and international institutions in Egypt so as to share all their opinions and get to know the actual improvements achieved in the Egyptian business environment.

Social protection and justice were among the top priorities of the economic reform program, confirmed Mr. Kouchouk to Moody's representatives.

Attempting to further stress this point, Mr. Kouchouk informed the latter with the main social protection programs carried out recently. Namely, monthly allocations per capita on ration cards increased from 21 to 50 EGP, thus boosting purchase capacity to 140%, and beneficiaries of Takaful and Karama monthly allocations increased to 100 EGP for almost 1.7 million families

. Moreover, salaries of public sector employees increased, tax exemption limits mounted up from 6500 EGP to 7200, besides approving a tax cut to all employees, and pensions upped by 10% for almost 10 million beneficiaries, illustrated Mr. Kouchouk.

Moody's representatives also met with ministers of Petroleum and Mineral Resources, Industry and Foreign Trade, Investment and International Cooperation, as well as CBE officials, so as to get informed with all economic reforms and developments achieved and those on the pipeline.