CAIRO: Minister of Finance Hani Kadry welcomed Fitch Ratings’ decision to upgrade Egypt’s long-term credit rating to “B,” a move he said he considered a positive step to boost confidence in the country’s economic plan, according to a ministry statement released Saturday.
In a Friday report, Fitch Ratings raised Egypt’s long-term foreign and local currency issuer default ratings (IDR) to “B” from “B-,” and the outlooks were maintained at “stable.”
This is the first credit upgrade of Egypt by Fitch in four years. In July, the rating agency affirmed Egypt’s long-term foreign and local currency IDR at “B-,” while the outlook was kept at “stable.” However, the agency praised the government’s recent oil price hike as “an important step to reduce subsidies which will contribute to Egypt’s substantial fiscal deficit—a key rating weakness.”
“Political stability has improved under President Sisi… this reflects a desire for stability, a clampdown on political opposition and an improving economy,” Fitch stated Friday.
The upgrade was mainly attributed to the government’s policy course designed to tackle serious structural weaknesses, Fitch said.
According to the minister, this upgrade will back government efforts to provide the finance needed for development plans and lure fresh investments in the coming period.
Kadry added that this upgrade followed international financing institutions’ praise of Egypt’s economic program and ability to hit medium-term targets, noting that the International Monetary Fund (IMF) commended Egypt’s economic program in the conclusion of the 2014 Article IV consultation in November.
“Egypt’s economy has begun to recover after four years of slow activity,” said IMF’s mission head Chris Jarvis at the conclusion of the consultation.