Cairo - Mubasher: Fitch Ratings affirmed Egypt's long-term foreign and local currency issuer default ratings (IDRs) at 'B' with a stable outlook, according to a recent report.
The issue ratings on Egypt's senior unsecured foreign and local currency bonds are also affirmed at 'B', the report added.
“The country ceiling and the short-term foreign and local currency IDRs are all affirmed at 'B'.”
Egypt's ratings balance a large fiscal deficit, a high general government debt/GDP ratio, strains on the balance of payments and recent volatile political history, the report indicated.
The government's programme of economic and fiscal reform has regained momentum, after stalling in the fiscal year to June 2016 when the budget deficit widened to a preliminary 12.2% of GDP.
The rating agency expects GDP growth to be at 3.3% in the fiscal year 2017, given the challenges the economy was facing before the EGP flotation, especially in manufacturing and tourism, and because the fiscal and monetary reforms will initially be a drag on private consumption.
“Despite fiscal consolidation, we forecast stronger GDP growth in FY 2018, at 4.5%, as the exchange rate adjustment beds in, as gas production starts at the giant Zohr field, and with stronger investment,” the report highlighted.
Fitch also expects government debt/GDP ratio to fall to 93% in fiscal year 2018, on a smaller budget deficit and an exchange rate of EGP 14.5 against the US dollar.
