EGYPT: S&P Global Ratings maintained Egypt's credit rating at "B" with a stable outlook, citing strong economic growth prospects following fiscal reforms backed by the International Monetary Fund.
The credit rating agency said the country's sovereign rating five levels below investment grade, reflects expectations that its fiscal deficit will gradually narrow, report agencies."The stable outlook balances S&P Global Ratings' expectation that Egypt's current account deficits will remain as a smaller percentage of GDP and that growth prospects will remain strong, against risks of fiscal slippages and an increase in the already-large stock of relatively short-dated government debt issued at high interest rates," S&P said.
Egypt has been implementing economic reforms as part of a three-year $12 billion loan agreed with the IMF, starting from November 2016. The measures included flotation of the exchange rate, energy subsidy cuts and fiscal consolidation.
The North African economy is forecast to expand 5.3 per cent in the fiscal year ending in June, underscoring a recovery from average annual growth of 3 per cent annually from 2011 to 2017, according to S&P.
Egypt's economy is subsequently forecast to grow 5.5 per cent annually over the next three years, S&P said.
Economic progress will be driven by more investments in a "robust" pipeline of projects, increase in natural gas production and a rebound in tourism, according to S&P projections.
"The Egyptian economy is supported by the government's ongoing efforts to improve the business operating environment, including public procurement procedures, the industrial land allocation mechanism and the privatisation of state-owned enterprises," S&P said.However, private sector activity is still constrained by high, but gradually moderating, inflation and interest rates, the rating agency said.
In April, Egypt’s non-oil private sector economy expanded at the fastest rate since August 2015, driven by a rise in orders, employment and purchasing levels, according to the latest economy tracker by Dubai lender Emirates NBD.