Egypt’s economy is expected to robustly bounce back in 2022 driven by the projected increase of the real GDP to five percent, the diversity of the Egyptian economy sector, and the success of the current structural reforms, said Moody’s.
Moody’s projections were published in its Egyptian banks' macro profile report issued on Wednesday.
It also predicted Egypt’s economy to grow by 2.4 percent in the current FY2020/2021.
Moody’s said that Egypt's macro profile reflects its large and diversified economy, reform track record, structural impediments that inhibit investments, and challenging credit conditions.
Moody’s highlighted the inclusive procedures that Egypt’s government has been taking to contain the COVID-19 pandemic and its associated economic repercussions, adding that these procedures have contributed to its positive outlook for the Egyptian economy.
Moody’s also gave a stable outlook rate for the Egyptian banks based on their solid situation built on their finances and cash liquidity as well as the country’s economic reform programme that has benefited them.
It also gave Egypt’s sovereign credit a stable outlook, adding that it is expected to support banks’ performance.
Moody’s stressed that Egypt’s expansion in its financial inclusion policy and the increase in Egyptian expats' remittances support the finance and monetary base of the Egyptian banking sector.
It added that borrowing on the part of the private sector is expected to rise by seven or nine percent during in FY 2020/21.
In the same vein, Moody’s expected Egyptian banks’ equities to be stable thanks to the decrease in profit distribution that will contribute to alleviating the impacts of the decline in bank’s profits caused by the COVID-19 crisis.
Moreover, Moody’s praised the decision of the Central Bank of Egypt (CBE) to loans’ instalment moratorium for six months, saying that it contributed to curbing the increase of stalled loans.
The decision was among the precautionary procedures package that the CBE has been taking to contain the impact of COVID-19 on the Egyptian economy since the onset of the pandemic in February 2020.
Egyptian banks’ cash liquidity is expected to remain solid, benefiting from deposit inflows that accounted for about 73 percent of the total assets of the banking sector through July 2020 and the balances exchange between banks, according to Moody’s.
Since 11 May 2020, Moody’s has kept Egypt’s long-term rating at B2 with a stable outlook.