CAIRO: Minister of Finance Hani Qadry said that Moody’s decision to upgrade Egypt’s outlook is positive for the economy and the country’s position in the international investment map, according to a Tuesday statement, but that it was “not enough.”
On Monday, Moody’s Investors Service, a global credit rating agency and provider of financial analysis, upgraded Egypt’s investment outlook to stable from negative and affirmed its government bond rating at Caa1, according to a Monday market research paper.
Moody’s outlook upgrade was based on “the stabilized political and security situation, the launch of government initiatives toward fiscal consolidation, signs of a growth recovery and an improvement in macroeconomic stability and strong support from external donors,” according to the organization.
“The country’s outlook upgrade is not enough to reflect the positive developments at the political and economic levels, as well as the structural reforms adopted by the government recently and their effects on managing the national economy and boosting confidence in the economy on the medium and long-terms,” Qadry stated.
Qadry added that upgrading Egypt’s credit rating is being done “very slowly” and does not match with the pace of downgrading the country’s rating consecutive times by Moody’s since January 25 Revolution.
“In light of the fiscal reforms, the budget shortfall may be reduced to 8 percent of GDP within five years, and the general dent to range between 80-85 percent of GDP, compared to 97 percent currently,” said the minister.
He added that social and economic indicators, headed by unemployment inflation and poverty rates are also expected to witness a significant improvement in this period.
Dr. Ghada Ibrahim, financial analyst at Capital Securities Brokerage, told The Cairo Post that “the stable outlook reflects Moody’s assessment that Egypt’s economic risks are currently balanced, which will lead to a stronger economic performance.”
Fiscal and structural reforms would reduce the budget deficit, which would support a further upgrading, Ibrahim added.
Moody’s also affirmed the ratings for Egypt’s backed global bonds at Aaa, foreign currency bond ceiling at B3, foreign currency deposit ceiling at Caa2 and local currency country risk ceiling at Ba3.