Moody's decision to affirm Egypt's credit rating shows economy's resilience: Minister

MENA , Ahram Online , Friday 27 May 2022

Minister of Finance Mohamed Maait described on Friday Moody's decision to affirm Egypt's credit rating despite the complex external shocks facing the global economy and emerging countries as "a very positive decision."

Minister of Finance Mohamed Maait
Minister of Finance Mohamed Maait


In a statement by the finance ministry, Maait pointed out that Moody's decision shows international institutions' confidence in the Egyptian economy's strength and resilience in light of the economic and financial policies and reforms implemented over the past years.

The recent Moody's report noted the improvement in institutional capabilities of the Egyptian government, the minister noted.

The decision to affirm Egypt’s credit rating by the three major global credit rating institutions in April and May amid global crises emphasises the strength of the Egyptian economy given that most of the economic and financial indicators had improved, he said.

In April, Fitch Ratings affirmed Egypt's long-term foreign-currency issuer default rating (IDR) at B+ with a stable outlook. Standard and Poor’s (S&P) also affirmed Egypt’s long and short-term foreign and local currency sovereign credit ratings at B/B.

Maiit stressed that the economy's resilience was reflected in the increase in the growth rate to 7.8 percent during the period July 2021-March 2022 and is expected to register 6.2 percent growth during the entire fiscal year.  He also highlighted the decline in unemployment rates to 7.2 percent in March 2022, noting that this is the lowest rate in many years.

Moody’s is closely following the economic situation in Egypt over the coming months and could upgrade Egypt’s negative outlook to stable once a positive improvement to the economic and financial situation is reached, Maait added.

On Thursday, Moody's Investors Service affirmed the long-term foreign and local-currency issuer ratings at B2, yet lowered its outlook from stable to negative.

Moody's also maintained Egypt's foreign-currency senior unsecured ratings at B2, and its foreign-currency senior unsecured MTN program rating at (P)B2.

Credit rating is an index that reflects the country’s ability to fulfil its international obligations, including external debt services.

On this note, Egypt's Deputy Finance Minister Ahmed Kojak stressed, according to the statement, that the government will continue implementing its strategy to manage and reduce the government-debt to-GDP-ratio to reach 75 percent in the medium range, and also continue its efforts and plans to extend the debt maturity, which recently reached to 3.3 years up from 1.5 years in June 2016.

Maait said Moody's rating is positive and mirrors the confidence of the international institutions in the Egyptian economy.

He highlighted that Moody’s report on Egypt welcomed the continuous improvement in growth rates, decline in unemployment and budget deficit, and movement going forward to attain a budget primary surplus.

“Also, the government targets raising the private sector share in the economic activity to 65 percent over the coming three years and attract $10 billion in investments annually,” Maait explained.

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