Change Location & Date

STATEMENT BY THE AFRICAN PEER REVIEW MECHANISM ON THE CREDIT RATINGS ACTION ON THE ARAB REPUBLIC OF EGYPT

APRM

Car description

News

USAID is thrilled to announce our participation in @APRMorg which is held for the first time in Egypt! The event focused on the agility and resilience of the African countries post COVID-19 and is a self-monitoring mechanism that aims to foster good
governance.

3

Want to learn more about strategic planning and foresight in Africa in response to #COVID19? Join @UNDESA, Resident Coordinators Office and @APRMorg webinar 8 December 8AM EST.

Register now https://bit.ly/REWAFR2

Load More...


STATEMENT BY THE AFRICAN PEER REVIEW MECHANISM ON THE CREDIT RATINGS ACTION ON THE ARAB REPUBLIC OF EGYPT

PUBLISHED BY: APRMPOSTED: 28-10-2021

28 October 2021 The African Peer Review Mechanism (APRM), a specialized entity of the African Union (AU) that supports African countries in the area of credit ratings, undertakes routine reviews of rating outcomes assigned by international credit ratings agencies on African countries.
The APRM has noted the outcome of the recent rating review of the Arab Republic of Egypt by S&P Global in which the international rating agency affirmed the country’s long-term foreign currency sovereign credit rating at B with a stable outlook. This is the fourth time when Egypt’s rating has been affirmed since the country registered its first Covid-19 case in February 2020. Affirming a rating means the country’s current rating remains unchanged and this has been so since May 2018. A rating class of B means that the government is vulnerable, but still has the capacity to meet its financial commitments, although adverse business, financial or economic conditions will likely impair its capacity to meet its financial commitments. In addition, a ‘stable’ outlook indicates that there is a low likelihood that the current rating will change in the near to medium-term. The APRM also considered that Fitch Ratings and Moody’s last upgraded Egypt’s rating to B2 and B+ in March and April 2019, respectively.
On the basis of the risk factors in the sovereign credit rating methodology, the fundamentals in Egypt calls for the country’s long-term foreign currency sovereign credit rating to be upgraded to, at least, a BB- rating class. The APRM makes the following observations.
  • Egypt is one of the very few emerging economies that experienced a positive economic growth in 2020 due to the government’s timely response to the Covid-19 shock and a short period of economic lockdown.
  • Egypt’s overall budget deficit is significantly narrowing to 6.8% from 7% in 2020, its economy is expected to achieve an average growth rate of at least 5.5%, primary surplus is expected to reach 1.5% and the overall budget deficit to declining to 7.4% of GDP from 8%. Public debt is expected at 86% of GDP compared to the previously forecasted 91%. Thus, Egypt’s economic growth figures are exceeding expectations, the country current account position is improving to reduce its financing needs and the economic reform program has led to a significant reduction in government debt.
  • All the three international rating agencies have acknowledged in their current year’s reviews that Egypt’s economy has demonstrated “stability and resilience”, through the global Covid-19 crisis.
  • Egypt’s economic, financial and structural reforms have conspicuously provided a strong and diversified domestic financial base and high foreign exchange reserves amounting to US$39 billion in 2020, rising from US$15 billion in 2015.
  • Egypt is the only African country that managed to issue a US$5 billion Eurobond, its biggest issue in history, at substantially fair yields, during the peak of Covid-19 in May 2020, when all other African countries were priced out of the volatile global financial markets.
  • Egypt’s has lifted its state of emergency, which will unlock the country’s tourism sector and other foreign exchange sources.
  • The country rolled out a rigorous’ vaccination campaign to vaccinate 40% of the population by the end of 2021, issuing a vaccine mandate for all civil servants and the public who wish to access government buildings.

Based on these factors, the APRM views that it would be prudent for the Government of Egypt’s current long-term foreign currency sovereign credit ratings by Moody’s and S&P Global to be upgraded to, at least, a BB- rating class to reflect the country’s current creditworthiness. A rating upgrade will translate into a significant decline in the cost of servicing government debt and further stimulate the economic fundamentals in Egypt. In view of the above, the APRM, together with the government of the Arab Republic of Egypt, will engage the Moody’s and S&P on the newly affirmed credit rating with aim of attaining a rating upgrade in the upcoming review.

 

END


APRM Media & Communication 

For inquiries please contact: Liziwe Masilela (Head of Communications APRM)

[email protected]

 

 

Default Equipment

  • Press Releases
  • Phone:

  • Email:

  • Pick Up:

    none

    12/03/2021

    12:00 AM

  • Drop Off:

    none

    12/04/2021

    12:00 AM

Change Location & Date
css.php