Global Courant 2023-04-22 20:32:10
Egypt will implement a package of financial, monetary and structural measures to address the high external financing needs of the Egyptian economy that gave rise to this Standard & Poor’s Global Ratings (S&P Global Ratings) Egyptian Finance Minister Mohamed Maait has announced that he will lower the outlook for Egypt to negative.
He explained that the decision for S&P global ratings to keep Egypt’s credit rating at B in both local and foreign currencies while downgrading the future outlook for the Egyptian economy from stable to negative was due to pressures related to foreign transactions and the economy’s exposure to external pressures .
The largest of these external pressures is related to the armed conflict in Ukraine and subsequent negative economic fallout globally, including an unprecedented wave of inflation, he added.
The minister noted that the Egyptian government provides financial support to sectors of society most vulnerable to inflationary pressures.
Maait stressed that Egypt will continue to implement the economic reform program supported by the International Monetary Fund and will address the high external financing needs of the Egyptian economy.
According to S&P Global Ratings estimates, Egypt’s external financing needs are approximately $17 billion in the current fiscal year 2022/2023 and $20 billion in the next fiscal year 2023/2024.
Maait assured that the Egyptian government is eager to implement what it announced in December 2022 regarding structural reforms, especially its supply program, and to attract more foreign direct investment while finalizing financial control policies, which will lead to a continuous flow of foreign currency.
S&P global ratings expect average economic growth of four percent annually over the next three years, driven by the construction and energy sectors, alongside other sectors such as information and communications technology, wholesale and retail, manufacturing, agriculture and health, Mait said.
Mait added that S&P Global Ratings too shed light on the continued achievement of fiscal discipline, largely evident during the results of fiscal year 2021/2022, when the overall deficit reached 6.1 percent of GDP, up from 6.8 percent of GDP during fiscal year 2020/2021 in light of the pandemic.
The minister referred to the Egyptian economy recording a primary surplus of 1.3 percent of GDP for the fifth year in a row.
The report highlighted strong government revenue growthThis is due to the expansion of the tax base despite economic conditions due to large-scale mechanization measures being implemented to improve tax administration, he noted, alongside efforts to rationalize spending and expand the social protection network.
He noted that the report envisions a reduction in the current account deficit in nominal terms over the coming period to 2026 as exchange rate flexibility will support Egypt’s exports amid strong performance of petroleum revenues. exports, particularly from natural gas – which recently peaked at $700 million per month.
S&P global ratings referred to the importance of the private sector’s role in strengthening economic activity by increasing the private sector’s contribution to overall investment, said Deputy Minister for Financial Policy and Institutional Development, Ahmed Kajouk.
There was also a noticeable improvement in fiscal year 2021/2022 current balance indicators as revenues from non-oil exports achieved a notable annual increase of 29 percent in the face of increases in fertilizer exports, medicines and ready-to-use products. clothes.
Thanks to the increase in natural gas exports, a large surplus of 4.4 percent was realized on the oil trade balance.
The Suez Canal achieved its highest historic revenue of $7 billion and is expected to exceed $8 billion by 2023, alongside growth in tourism revenue.
Remittances from Egyptian foreign workers continued to generate high returns over the past year, totaling about $33 billion.
Revenues from foreign direct investment increased 71 percent to about $9.1 billion, compared to about $5.2 billion in the prior year, thanks to diversification of sources and the foreign investment flowing into many sectors – the most important being the manufacturing industry, construction and construction. , communication and information technology.
