Standard and Poor’s (S&P) Global Ratings raised Egypt’s credit outlook from stable to positive on 18 March, weeks after the government decided to enforce a long-awaited free-floating currency exchange regime. “[The decision] reflects our view that the determination of the exchange rate via market forces will help drive GDP growth and over time support the government’s fiscal consolidation plan,” S&P explained. Despite the lift, the credit rating agency affirmed its current rating of Egypt at B-, placing it six notches into junk status, similar to El Salvador and Ecuador. “We view the exchange rate liberalization, coupled with Egypt’s commitment to ambitious budgetary consolidation targets, as a crucial step in bolstering confidence and fostering growth in Egypt’s economy and its debt sustainability,” wrote S&P analysts Trevor Cullinan and Ravi Bhatia wrote in a statement reported by Bloomberg. The positive outlook arrived after forecasts indicated that a market-driven foreign exchange rate will stimulate growth and, in the long run, support the government’s efforts to restabilize its fiscal conditions. Furthermore, ongoing funding from international organizations like the International Monetary Fund (IMF), European Union (EU), and World Bank Group (WBG) is expected to significantly…
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Source: egyptianstreets
