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S&P sovereign credit rating a 'testament of confidence' in Egypt's reform programme: Minister

Ahram Online , Saturday 12 May 2018
Amr El-Garhy
File Photo: Egypt's Finance Minister Amr El-Garhy attends a news conference in Cairo, Egypt (Photo: Reuters)
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Egypt’s finance minister Amr El-Garhy said in a press release on Friday that Egypt considers Standard & Poor's sovereign credit rating for the country of B to be a “testament of confidence” in the success of Egypt’s economic reform programme.

El-Garhy said that the rating is an indication that Egypt is on the right track, adding that the rating will contribute to raising confidence in the capabilities of the Egyptian economy.

“This will contribute to attracting more foreign investments to the country, as well as reducing the cost of finances at the disposal of the state, its institutions, and the private sector,” El-Garhy said.

On Friday, S&P raised Egypt’s sovereign rating to B from B-; while changing the outlook from positive to stable, citing the country’s “more competitive exchange rate, rising domestic gas production, and increasing exports.”

The international ratings agency added in its report that it is anticipating that the country’s ongoing economic and fiscal reforms will underpin rising business confidence and sustain capital inflows.

The report said that the agency believes that the recent re-election of Egyptian President Abdel-Fattah El-Sisi bodes well for the country’s stability and the continuity of economic reforms.

Egypt has been receiving thumbs up for its IMF-supported reform programme – which has included the liberalisation of the country’s currency in November 2016 and the gradual lifting of subsidies since 2014.

The flotation of the country’s currency has helped it secure a $12 billion loan package from the IMF, receiving the first tranche of the loan in November 2016.

The second tranche was disbursed in March 2017. The IMF signed off on the third tranche in January 2018.

Egypt’s economic growth rate jumped in the first half of the current fiscal year to 5.2 percent from 3.6 percent the previous year.

The country expects an economic growth rate of between 5 and 5.25 percent in the current fiscal year, which ends in June 2018.

The IMF predicts the GDP growth to be boosted further to 4.8 percent in 2017/18 from 4.2 percent in 2016/17, and rise further to around 6 percent in the medium term.

Last week, the IMF said in Cairo that Egypt should “broaden and deepen” its reform agenda and focus on the business climate and job creation for the country’s growing population, while hailing the country's progress in carrying out its programme for economic reform and modernisation. 

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