Arab Finance: Fitch Ratings raised Egypt's long-term foreign currency issuer credit rating (IDR) from “B-” to “B”, with a stable outlook, indicating significant improvement in the country's external finances, fiscal policies and economic resilience, according to… For a statement Issued on November 1, 2024.
The decision reflects several key developments, including strengthening foreign exchange reserves, increasing foreign investment, and strategic financial adjustments.
Egypt's external financial position has improved due to foreign investments, especially from the Ras El Hekma project, along with increased non-resident investments in domestic debt and new financing from international financial institutions.
This also supports Egypt's shift towards a more flexible exchange rate and tighter monetary policies.
Since March, Egypt has received an expanded facility from the International Monetary Fund worth $8 billion and a support package from the European Union worth 7.4 billion euros.
Fitch expects average foreign direct investment to reach about $16.5 billion during the fiscal years 2024/2025 and 2025/2026, driven by new investments from the Kingdom of Saudi Arabia and the Ras Al-Hekma project.
These flows are necessary to compensate for the widening current account deficit, which rose to 5.4% of GDP in the 2023/2024 fiscal year, but is expected to gradually shrink over the next two fiscal years.
Fitch added that the government has implemented initial measures to control fiscal risks, including setting a cap on public investment and including additional economic entities within the government's general budget from the 2024/2025 fiscal year onwards.
Fiscal policy adjustments, such as tax reforms and reducing fuel subsidies, helped contain the general government deficit, which was estimated at about 3.4% of GDP in the 2023/2024 fiscal year.
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