Moody's affirms Egypt's B3 rating, stable outlook

2017-07-21 18:00

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Moody's Investors Service maintains "stable outlook" on Egypt due to economic reforms with B3 rating.

The B3 rating is at number 16 out of the 21 ratings-tier followed by global rating agencies.

In its ranking report published on Thursday, Moody's said the International Monetary Fund (IMF) review of Egypt's economic reform program is "credit positive indicating the current account deficit to shrink gradually to 3 percent of GDP by the end of 2020."

Last week, IMF's Executive Board completed the first review of Egypt's economic reform program and approved the second tranche worth 1.25 billion U.S. dollars of three-year, 12-billion loan.

The positive review report of the IMF indicates the progress in implementing reforms will help reduce the nation's fiscal and external vulnerabilities, according to Moody's.

Moody's praised the Egyptian government decision of floating the currency as contributing in limiting pressures on payment balance, boosting the state foreign liquidity, eliminating the unofficial market, and incredibly increasing the cash reserve.

The Central Bank of Egypt's foreign currency reserves reached 31.3 billion U.S. dollars by the end of June, the highest ever since March 2011, when it was estimated at 36 billion dollars.

Moody's report forecasted "a gradual narrowing of Egypt's general government fiscal deficit to about 9.5 percent of GDP by the end of this fiscal year -June 30, 2018- from around 11 percent in 2017, and an improvement in the debt/GDP ratio to 86.5 percent from 95 percent over the same period."

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