Egypt’s Minister of Finance Mohamed Maait said that Standard & Poor’s (S&P) decision to maintain the country’s credit rating in both local and foreign currencies reflects the continued confidence of international institutions in Egypt’s economic stability.
S&P has kept Egypt’s B credit rating unchanged whilst also maintaining the economy’s outlook stable for the second time within six months in 2020. The international agency’s move reflects the continued confidence of international institutions, especially credit rating agencies, in the stability and robustness of the Egyptian economy.
It also reflects the general confidence in the local economy’s ability to positively deal with the repercussions of the novel coronavirus (COVID-19) pandemic, whilst also overcoming all external and internal shocks resulting from it.
He explained that this comes because the government continues to implement the required financial, economic, and monetary reforms that would improve the business operating environment.
These reforms would also ensure the sustainability of public financial indicators, and enhance the Egyptian economy’s capabilities for growth and creating productive job opportunities.
Maait said that the decision indicates the effectiveness and balance of the government’s economic and financial policies, especially in dealing with the repercussions of the coronavirus pandemic.
These have contributed to maintaining the stability of economic and financial conditions to a large extent, compared to the repercussions currently being experienced by other advanced and emerging economies.
This is evident by the Egyptian economy’s scoring positive growth of about 3.6% in fiscal year (FY) 2019/20. There has also been the provision of all means and needs to ensure the availability of health services, basic goods and other services for citizens, in light of the pandemic’s escalation.
The minister pointed out that the government is continuing to push the pace of economic reform, by adopting and implementing a package of structural reforms to enhance growth rates and private sector participation in economic activities. The reform is also aiming to strengthen the governance system and follow-up systems for economic performance, whilst improving the business climate and environment.
He explained that the S&P report expects the Egyptian economy to achieve 2.5% growth rate in FY 2020/21, despite the challenges posed by the coronavirus pandemic. This reflects its estimates of the expected negative global growth during the current fiscal year, as well as the negative growth rates estimated for most countries.
Maait said that S&P had expected the Egyptian economy to return to strong growth rates of up to 5.4% by 2022. This would occur with the recovery of tourism, the return of strong growth in the energy and manufacturing sectors, and an improvement in the business environment due to the completion of structural reform.
Moreover, Deputy Minister of Finance for Financial Policies and Institutional Development, Ahmed Kouchouk, said that S&P expects the return of economic, financial, and monetary indicators to achieve very good rates in the short term.
The Egyptian economy is recording real growth rates of about 5% in the medium term, and a decrease in debt-to-GDP rate in the medium term, in addition to achieving a sustainable primary surplus of 2% of GDP, starting from FY 2020/21.
This has come in light of the government’s commitment to continuing the pace of reform, pushing and supporting economic activity and growth rates, through preventive economic measures.
Kouchouk said that S&P experts praised the Egyptian government’s ability to achieve a primary surplus of 1.8% of GDP in FY 2019/20. This occurred despite the negative repercussions of the coronavirus pandemic on the regional economy and the entire world.