The ratings agency did note that it could improve Egypt's credit rating in the coming period if the country is able to meet its demand for foreign currency financing
Ratings agency S&P Global Ratings lowered its outlook for Egypt’s economy to negative during the weekend, however, it also affirmed its local and foreign currencies credit ratings at B.
“The negative outlook reflects risks that the policy measures implemented by the Egyptian authorities may be insufficient to stabilize the exchange rate and attract foreign currency inflows to meet the sovereign's high external financing needs,” S&P Global wrote in its report.
The ratings agency did note that it could improve Egypt's credit rating in the coming period if the country is able to meet its demand for foreign currency financing through its flexible exchange rate and privatization program.
S&P Global expects the country’s external financing needs to hit $17 billion during FY2022/2023, and $20 billion for the next fiscal year, adding that around $26 billion will be needed to finance the current account deficit. “We assume that any external funding gaps will be covered by additional GCC government support,” S&P wrote, adding that it could also come from portfolio flows and fresh borrowing.
Finance Minister Mohamed Maait released a statement the next day pointing towards the Russia/Ukraine conflict’s impact on the global economy, which resulted in Egypt’s skyrocketing inflation. Egypt saw an increase of foreign currency inflows driven by petroleum export revenues, particularly natural gas exports which have hit $700 million monthly, he explained.
Maait added that Egyptian expat expats remittances reached $33 billion last year and that foreign direct investment (FDIs) were by up 71% to record $9.1 billion in 2022 up from $5.2 billion the year before.
According to S&P Global Ratings, Egypt's economic growth would hit 4% over the next three years.
