Egypt's Finance Min. Comments on Fitch's Decision to Downgrade Egypt's Rating

Mohamed Maait, Egyptian Minister of Finance, said that the Egyptian economy is still able to provide external financing needs in a way that reflects its sufficient flexibility in facing the internal and external challenges resulting from geopolitical tensions. Because of the extreme pressure it imposes on the budgets of various countries, including Egypt, in light of the difficulty of accessing international financial markets and the high cost of financing with increased interest rates.

In a press statement issued today, Saturday, Mohamed Maait explained the possibility of Egypt obtaining about $5 billion annually on concessional terms from multilateral development banks. This indicates the confidence of these international institutions in the economic path pursued by the Egyptian government to deal balancedly with successive global crises.

Commenting on Fitch's decision to reduce Egypt's sovereign credit rating in local and foreign currencies from "B" to "B-" with a stable long-term outlook, the minister said that the Egyptian government has identified sources for providing external financing needs until the end of the current fiscal year, estimated at $4 billion, with the aim of continuing to diversify international markets.

Maait hinted at the success in returning again to the Japanese markets, and implementing the second international issuance of Samurai bonds at a value of 75 billion Japanese yen, equivalent to about about $0.5 billion, with distinguished pricing for the periodic return at a rate of 1.5% annually, with a maturity of 5 years, and issuing sustainable international bonds in the Chinese financial market.” Panda,” which is allocated to finance projects worth about 3.5 billion Chinese yuan, equivalent to about $0.5 billion, explaining that we have paid 52 billion dollars in external obligations during the past two years despite the extremely severe global economic challenges.

He added that foreign investment flows amounted to $10 billion during the last fiscal year, and it is expected to rise to $12 billion this year with the expansion of the implementation of the “Government Offering program", which aims to empower the private sector and encourage it to increase its contributions to economic and development activity. This will provide more job opportunities and improve the standard of living of citizens and the services provided to them.

The Suez Canal recorded revenues of $10 billion in the last fiscal year, and it is targeted to increase to $12 billion this year. Structural reforms in various sectors helped overcome the repercussions of the regional crisis. According to the Egyptian Minister.

The Minister pointed out that the state’s public finances were able to achieve a strong performance in a way that confirms its ability to deal positively and flexibly with the repercussions of inflation and high interest rates, in a way that was reflected in the Egyptian government’s success in achieving financial discipline despite the intensity of global economic pressures, and this is what Fitch relied on. “In changing the future outlook from negative to stable.

He pointed to achieving a first surplus of 1.6 percent of the gross domestic product during 2022/23, compared to a first surplus of 1.3% of the gross domestic product in 2021/22, with a target of 2.5% this year.

The Fitch report had indicated an increase in the risks of external financing for Egypt, in light of the increasing cost of financing and interest rates, the decline in the price of the pound against the dollar coinciding with the time of payment of external obligations, and the rise in government debt indicators.

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