Finance Minister Mohamed Maait welcomed Standard & Poor’s decision on Friday to maintain Egypt’s credit rating in both local and foreign currencies at “B”, with a stable outlook for the second time in 2022.
Maait indicated that this decision reflects the continued confidence of international institutions, especially credit rating institutions, in the stability and solidity of the Egyptian economy and its ability to deal positively with difficult external repercussions, the most important of which are the consequences of the war in Europe and the ensuing negative economic effects globally, most notably: the rise in the prices of basic materials.
He added that Standard & Poor’s attributed its decision to maintain the stable future outlook of the Egyptian economy to its expectation of the continued commitment of the Egyptian authorities to implement economic and structural reforms that would push economic growth supported by an increase in the role of the private sector in economic activity, in addition to the expectation of analysts in the institution that the Egyptian economy would achieve high growth rates in the medium term due to the adoption of encouraging policies and reforms to the investment and business environment, which supports sustainable economic growth.
He pointed out that the Corporation highlighted in its report the decrease in the total deficit to 6.1% of GDP, compared to 6.8% of GDP in fiscal year 2020/2021.
He explained that the report issued by Standard & Poor’s indicates a significant improvement in the indicators of the current balance for FY 2021/2022, as the proceeds of non-oil exports achieved a remarkable increase of 29% annually in light of the increase in exports of fertilizers, medicines and ready-made clothes, and a large surplus was recorded on the oil balance is at $4.4bn, in light of the expansion of natural gas exports, which have recently reached $600m per month, and the Suez Canal has achieved a record that is the highest in history, reaching $7bn.
He pointed out that the remittances of Egyptians working abroad continued to achieve high levels during the past year, amounting to about $32bn and the revenues of the tourism sector increased significantly during the past year in light of the recovery of the sector, which achieved a proceeds of $10.7bn with the diversity of tourism sources to witness inflows from new markets. In addition, the proceeds of foreign direct investments increased by 71% to reach about $9.1bn compared to about $5.2bn in FY 2020/2021.
Maait said that the war in Europe led to sharp increases in commodity prices and tightened global monetary conditions, which led to a large capital outflow from emerging markets in general, including the Egyptian market, but Standard & Poor’s expects no further capital outflows and that this is not a likely scenario in Egypt, given the improvement in macroeconomic conditions in addition to the increase in inflows from the Gulf Cooperation Council countries to Egypt and the intention of the Egyptian government to attract an estimated revenue of about $10bn annually over nearly four years in FDI.
Ahmed Kouchouk, Deputy Minister of Finance for Financial Policies and Institutional Development, confirmed that Standard & Poor’s praised, in its report and analysis, the state’s continuous efforts to improve the business operating environment that supports strong and sustainable growth in the medium term in Egypt.
He pointed out that in this context, the credit rating institution indicated the imminent issuance of the state ownership policy document in its final form, which contributes to emphasizing the desire of the Egyptian state and its institutions to encourage and attract the private sector to increase its investments and strong presence in the Egyptian market and increase its strong contribution to economic growth during the coming period.
He explained that the state ownership policy document and the accompanying reforms represented a “road map” to increase the role and contribution of the private sector in economic activity.
He added that Standard & Poor’s can improve Egypt’s credit rating during the coming period if the economic expansion in Egypt is high and strong, and if the reform program actually implemented during the coming period is able to attract more external flows into the country and achieve a significant decrease in public debt levels as a percentage of GDP and ensuring access to sustainable external financing under difficult economic conditions.
