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Saudi Arabia, China financial support is credit positive for Egypt: Moody's

Ahram Online , Monday 1 Feb 2016
Moody
A Moody's sign on the 7 World Trade Center tower is photographed in New York August 2, 2011 (Reuters)
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The recent pledges for financial support by Saudi Arabia and China to Egypt are credit positive for the country as they ease the recent balance of payments pressures, said international credit agency Moody's in a statement on Monday.

Despite the nascent recovery in the last fiscal year, recent events took their toll on Egypt's balance of payments, hitting tourism, suez canal revenues and exports.

Low oil  prices hit Egypt's merchandise exports which fell to $21.9 billion from $26.1 billion while suez canal revenues fell on the back of weak global growth.

The ailing tourism sector was also hit a blow after showing signs of early recovery when a Russian tourists plane was downed in Sinai governorate.

Saudi Arabia recently pledged  $20 billion worth of petroleum products to Egypt over five years and China pledged $1.7 billion loans for Egypt's central bank and largest state-owned bank National Bank of Egypt, in addition to $15 billion worth of investments.

Egypt has also received $1 billion loan from the World Bank as part of a $3 billion package over 3 years.

Although these loans raise Egypt's external obligations, low levels of total external debt mitigate possible resulting risks.

The international credit agency saw these packages as a sign Egypt is broadening its pool of support and as a step towards improved funding transperancy regarding funding conditions.

Egypt's reserves stood at $16.45 billion at December end, down from $36 billion before the 2011 uprising.

 

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