Finance Minister: Egypt's Rating Upgrade Testifies To Success of Egyptian ReformsSource: www.export-egypt.com 4/19/2019, Location: Africa |
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Finance Minister Mohamed Maait said upgrading Egypt's long-term foreign and local currency issuer ratings from B3 to B2 testifies again to the success of the economic reforms carried out by the Egyptian government.
The upgrade also mirrors international foundations' confidence in the Egyptian economy, Maait said in press statements. He said Moody's report lauded the Egyptian government's ability to re-arrange its priorities in a way that allowed the government to spend more on investments and social protection programs. Moody's Investors Service has upgraded the long-term foreign and local currency issuer ratings of the Government of Egypt to B2 from B3. The outlook was changed to stable from positive, Moody's said on its website. The decision to upgrade the rating primarily reflects: i) Moody's expectation that ongoing fiscal and economic reforms will support a gradual but steady improvement in Egypt's fiscal metrics and raise real GDP growth. ii) Moody's increasing confidence that factors, such as Egypt's large domestic funding base, support its resilience to refinancing shocks notwithstanding the government's very high borrowing needs and interest costs. At the same time, Moody's has upgraded Egypt's foreign currency senior unsecured ratings to B2 from B3, and its foreign currency senior unsecured MTN program rating to (P)B2 from (P)B3. Moody's has also changed Egypt's foreign-currency bond ceiling to B1 from B2, the foreign-currency deposit ceiling to B3 from Caa1, and the local-currency bond and deposit ceilings to Ba1 from Ba2. The short-term country ceilings for foreign-currency bonds and deposits remain unchanged at Not Prime (NP). Moody's expects a steady improvement in Egypt's fiscal metrics, albeit from very weak levels. In particular, maintained primary budget surpluses combined with strong nominal GDP growth will contribute to reducing the general government debt/GDP ratio to below 80% by fiscal 2021 (the fiscal year ending in June 2021) from 92.6% in fiscal 2018. Budget execution data for fiscal 2019 indicate that the government is on track to achieve its 8.4% of GDP general government deficit target from a peak of 12.9% in 2013, it said. |
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