Standard & Poor’s “S&P” agency maintained the sovereign credit rating of Egypt in the local and foreign currencies as unchanged at the level of “B” K while also maintaining the stable outlook for the Egyptian economy for the third consecutive time since the beginning of the Corona crisis.
The rating agency indicated in a report issued on Friday evening that the Covid-19 pandemic affected Egypt’s tourism income, export revenues, and increased its external debt, but it sees the country’s ability to access international financing markets with the support of reserves to cover a temporary increase in external financing requirements according to Reuters”.
Egyptian Finance Minister Mohamed Maait commented on the agency’s report that the Egyptian economy, according to Standard & Poor’s estimates, can overcome the negative repercussions resulting from the pandemic due to the improvement of major economic indicators, such as the stability of public finances and the existence of a large and reassuring foreign exchange reserve.
The Egyptian minister expected that Egypt’s GDP growth will achieve 2.8% during the current fiscal year, as a result of the positive and high contribution of several sectors, especially the information technology sector, the health sector, government services, the wholesale and retail trade sector, and the agricultural sector, which reduced the impact of Corona on Tourism, aviation, manufacturing and petroleum sectors.
The Egyptian Deputy Minister of Finance for Fiscal Policy, Ahmed Koujok, said that government debt rates are expected to decline as a percentage of GDP, and the burden of the debt service bill will decrease due to the continuing achievement of a primary surplus of 2% of GDP in the coming years. This is as a result of the Ministry of Finance’s efforts to extend the life of the debt, which reached 3.2 years during 2020, targeting 3.6 years by the end of June 2021, in light of the low domestic interest rates, which was supported by the agency, according to Koçuk.
Tariq Abdel-Rahman, managing director of Compass Capital, believes that “the price of the pound is expected to drop against the dollar in the event of escalating tension with Ethiopia over the Renaissance Dam file, and the slowdown in the tourism sector’s recovery may also put pressure on Egypt’s foreign exchange resources due to the slow vaccination. In addition to international factors such as high prices of wheat, corn and oil, which causes an increase in the value of foreign currencies needed for import operations.
Regarding inflation figures; Abdel-Rahman believes that it will remain among the targets of the Central Bank of Egypt in the event that the flows of other dollar resources stabilize.