Arab Finance: Standard & Poor's credit rating agency affirmed its outlook for Egypt at positive, and maintained its debt rating at B-/B.
It indicated in its review that the positive outlook reflects the possibility of further improvements in Egypt’s external and financial positions, and also reflects the agency’s view that the new exchange rate regime, driven by market forces, will help drive GDP growth and, over time, support the consolidation of the general budget.
The agency indicated that the significant increase in foreign direct investment, the generous donor program, portfolio flows and remittances support external liquidity and financial accounts, although some foreign direct investment transactions are one-time, and not recurring.
The credit rating agency warned that the strict monetary policy since March and high interest rates have prompted the government to spend about 70% of revenues on interest payments, noting that it will be “difficult for the authorities to maintain large primary budget surpluses in line with the IMF’s goals.” International, especially in light of the current “significant regional geopolitical risks,” which have implications for key sectors including tourism, gas, and Suez Canal revenues.
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