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Egypt says S&P's 'positive' outlook rating will consolidate trust in reform programme

The credit rating upgrade, announced Friday, will encourage investment and growth, says Egypt's finance ministry

Ahram Online , Saturday 11 Nov 2017
File Photo: Finance Minister Amr El-Garhy at a news conference in Cairo, Egypt 11 August, 2016 (Photo: Reuters)
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Views: 4638

Cairo has welcomed an announcement by the credit rating agency Standard and Poor's (S&P) that raised Egypt's outlook to "positive," one year after the country was deemed "stable" by the agency in 2016.

In an official statement, Finance Minister Amr El-Garhy said on Saturday the shift in Egypt's rating outlook was an important step in consolidating trust in Egypt's economic reform programme.

"This will contribute in attracting more foreign investment to the country, and reduce the cost of financing to both the state and institutions, as well as the private sector," the statement added.

On Friday, the international ratings agency said Egypt's outlook was revised to positive on "rising reserves and strengthening economic growth," with a B- sovereign credit rating maintained, reflecting wide fiscal and external deficits, high public debt, and low income levels. 

This is the first upgrade to Egypt's rating since May 2015. 

S&P added that it expects political stability in Egypt to continue under Egyptian President Abdel-Fattah El-Sisi, not foreseeing significant policy changes in the run-up to elections in early 2018.

According to S&P, the positive outlook reflects a "potential upgrade over next year" if Egypt continues to carry outs its reforms to support both investment and growth.

Egypt aims through its reform programme, embarked upon by the government in 2014, to curb a huge budget deficit and growing public debt, stimulate growth, create more jobs to lower unemployment and poverty rates, and increase national income.

The economic growth rate increased during the last quarter of 2016/17 to 4.8 percent, while the unemployment rate decreased to 11.9 percent in 2017, compared to 12.7 percent in June 2016, according to official data.

Last week, Egypt recorded its highest level of foreign reserves in its history, registering $36.702 billion at the end of October from $36.535 billion at the end of September.

Reserves have been climbing since Egypt signed an agreement for a three-year $12 billion loan with the International Monetary Fund (IMF) in November 2016, shortly after the country's decison to float its currency.

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