File photo: Credit rating agency Moody's (Photo: Reuters)
Moody’s expects Egypt’s GDP growth to accelerate to around 5 percent by 2019 and 5.5 percent by 2021, up from 4.2 percent in 2017, the credit rating agency said on Tuesday.
The forecast for GDP growth in Egypt comes “as structural reforms support more broad-based activity compared to the mostly consumption-driven pre-reform growth model,” Moody’s said.
Egypt had revised its GDP growth forecast to 5.3-5.5 percent for fiscal year 2017/18, from a previous 4.8 percent, the Planning Ministry announced last week.
Moody's forecast was part of the agency’s announcement of a stable outlook for the Levant and North Africa in 2018 on the back of improving growth that “offsets persistent fiscal and political risks.”
“High debt levels, low debt affordability, large funding needs and relatively high debt roll-over rates increase Lebanon, Egypt, and Jordan's exposure to a sharper-than-expected rise in interest rates,” the agency added.
This comes despite the fact that fiscal reform programmes and liquidity assistance mitigate exposure to higher interest rates, Moody's notes.
The agency also said that fiscal consolidation will be more challenging for Tunisia, Egypt and Lebanon.
Moody’s Investors Service had affirmed in August 2017 Egypt's long-term issuer and senior unsecured bond ratings at B3, maintaining a stable outlook.
The agency left Egypt’s rating unchanged since then, a decision mainly driven by the country's high debt levels.