Moody says IMF review is 'credit positive' for Egypt

Ahram Online , Saturday 22 Jul 2017

File photo of Moody's sign is displayed on 7 World Trade Center, the company's corporate headquarters in New York (Photo: AP)

Global credit rating agency Moody said in a statement on Thursday that the International Monetary Fund’s (IMF) review of Egypt’s economic reform programme is “credit positive for Egypt,” giving the country a B3 rating.

Last week, the IMF's executive board completed the first review of a $12 billion loan to Egypt, disbursing the final instalment of $1.25 billion from the first $4 billion tranche of the loan.

The IMF's review included an assessment of the implementation of Egypt's reform programme, which was adopted in since 2014 to curb the growing state budget deficit.

The reforms include cutting subsidies and government expenditure while implementing new taxes.

“Reforms are showing positive results, particularly the foreign exchange rate liberalisation in November 2016, which helped reduce balance-of-payment pressures from large current-account deficits and support the sovereign’s external liquidity position,” Moody said in the emailed statement.

The global credit rating agency expects Egypt’s budget deficit to shrink gradually to about 3 percent of GDP by the end of the 2020 fiscal year, supported by a pickup in exports.

In mid-August 2016, Egypt reached a staff-level agreement with the IMF over the three-year $12 billion loan to endorse the country’s fiscal reform programme.

In November, Egypt received the first instalment – an initial disbursal of $2.75 billion – of the first tranche following the floating of the Egyptian pound.

The next review will either be in November or December, finance minister Amr El-Garhy said in June, adding that Cairo expects to receive the second $4 billion tranche in two instalments during the 2017-18 fiscal year, which begins in July.

Egypt’s economy has struggled since the January 2011 uprising toppled long-time autocrat Hosni Mubarak, resulting in political and security upheaval. 

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