Fitch Maintains Egypt's 'B+' Credit Rating with Stable Outlook

Fitch Ratings maintained on Tuesday Egypt's rating at “B+” with a stable outlook.

In a report on its website, the agency attributed Egypt's rating to its economic and financial reform package, citing Egypt's reforms to macroeconomic stability and external financing.

The agency pointed out that the classification restricted the cause of the large fiscal deficit and high government debt.

Egypt has been implementing an economic reform program with the International Monetary Fund (IMF) since November 2016, which guarantees the government $ 12 billion over three years.The program includes cutting energy subsidies for electricity and petroleum products, increasing tax revenues, and controlling the state budget.

Fitch noted that macroeconomic performance was further boosted in 2019, pointing to higher growth to 5.6 percent, lower single-digit inflation, prudent monetary policy, lower oil prices and currency appreciation.

Fitch predicted that Egypt's inflation rate will reach 9.5 percent in 2019, and is expected to continue falling to 8 percent in 2020-2021.

On the interest rate level, the agency said that interest rates remain positive even after cutting them by about 450 points, expecting the central bank to maintain real interest rates.

The Central Bank of Egypt (CBE) decided last Thursday to reduce the rates of deposit and lending overnight and the rate of the main operation  by 100 basis points to 12.25 percent, 13.25 percent and 12.75 percent, respectively.

Last month, Egyptian Planning Minister Hala Al-Said said the Egyptian economy grew 5.6 percent in the first quarter of fiscal year 2019-20 from 5.3 percent a year earlier.

Also, the Egyptian Cabinet Media Center, Infographic, highlighted that Egypt toped economic growth in the region, one of the highest in the world despite the slowdown in global growth, according to reports from international institutions.

In November 2016, the CBE decided to liberalize the exchange rate, leaving the local currency to supply and demand mechanisms, while raising interest rates to around 20 percent.