S&P Global Ratings has revised Egypt’s outlook to positive from stable, maintaining the “B-/B” long- and short-term foreign and local currency sovereign credit ratings.
According to the report published by S&P in November 2017, the revised outlook reflects the potential of raising the rating 2018, if structural reforms that support investment, growth, and decrease inflation continue.
S&P projects that inflation will gradually descend over the next years and that further delivery of ongoing economic and fiscal reforms will support rising business confidence and sustain capital inflows.
“However, S&P maintained the B- rating due to wide fiscal and external deficits, high public debt, and low income levels. The statement explains that as a result of the larger than expected currency depreciation, and the interest rate hikes by the Central Bank of Egypt (CBE), debt has increased, peaking at 103% of GDP in the fiscal year (FY) 2017,” reports Daily News Egypt.
“The report estimates Egypt’s GDP growth in FY 2017 at 4.2%, and forecast that average growth over FY 2018, 2019, 2020 to increase to 4.4%, rising from their previous estimate of 3.8%, supported by ongoing improvement on the external front, reflected by rising foreign direct investment (FDI), remittances from Egyptians working abroad, and a steadily declining energy deficit as new natural gas production begins,” continues the report from Daily News.
The second half of 2017 saw positive strides in the country owing to economic reforms which spurred more investment on the back of the USD1 billion International Monetary Fund loan. And with the implementation of a new investment law, expected to improve the ease of business in the country, Egypt is positioning itself for a stronger 2018, hoping to lure local and foreign investors.